propertytalk Live! - International appetite for London homes continues to boost values

propertytalk Live! - International appetite for London homes continues to boost values

“The level of price growth this quarter was unexpected and our forecast for 2011 now looks bearish” - Yolande Barnes, head of Savills research

The prime central London residential market continues to confound expectations by recording its sixth consecutive quarter of growth, with values rising 2.8 percent since the turn of the year, according to the Savills quarterly prime central London index which covers central areas from Mayfair to Holland Park and Chelsea to St Johns Wood.

A significant slow down last quarter, coupled with rising stock levels, had led the property adviser to anticipate further slowing and forecast tiny falls across this year.

The Savills prime all London index (which includes central, southwest, northern and east of city areas) also resumed growth after a flat (-0.2 percent) last quarter of 2010. It showed a price rise of 2.0 percent in the first quarter of 2011.

Growth was seen across all prime locations and price bands, but with high ticket properties most in demand. The average price of Savills transactions in the first quarter of 2011 rose from £3million in 2010 to around £5million, with houses significantly outperforming flats. This reflects a continued surge of wealthy overseas buyers bringing foreign equity into the capital from all corners of the globe.

In the last quarter, there was a shift in the profile of overseas demand with increased activity from Middle Easterners and Russians buying homes for their own use – on the back of a strong oil price. Last year it was European investor buyers who were in the ascendancy – on the back of a strong Euro. Whatever the specific nationality, low sterling exchange rates since 2008 have attracted all buyer types into the market.