House prices: Unfinished bust | The Economist

House prices: Unfinished bust | The Economist

EARLIER this month a London flat was sold to Rinat Akhmetov, a Ukrainian businessman, for £136.4m. It was a British record. Mr Akhmetov’s new home takes up the top three floors of One Hyde Park, a block of luxury flats in Knightsbridge designed by Richard Rogers, a celebrated British architect. Sales at the development are expected to top £1 billion. Buyers from Asia and the Middle East are said to be keen to secure an investment (or a bolthole) in west London. The prices paid are staggering: it is as if the rich world’s devastating housing bust hadn’t happened.

Some hope the buoyancy at the top end of the London market will lead to a broader recovery. British house prices have proved more resilient than America’s, which adds to the case for optimism. Prices at their lowest point were down by only a fifth from their level at the start of the credit crunch in August 2007. They have since recovered, and are now around 15% below their peak. Home prices in 20 big American cities, by contrast, fell farther and have struggled to make up ground ...