Central London property still hitting the
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Property prices in prime residential areas of central London property are holding up well, according to the latest survey from chartered surveyors Knight Frank. December showed a surprising increase over the November figures with prices rising by 1%, reversing the trend of the previous two months. This took annual growth rates to 28.6%, very similar to the same time last year when December 2006 annual growth stood at 28.7%, the highest annual growth rate since June 1979. The area showing the greatest growth rate over the past quarter was the southwest region of central London at 1.8%. Knightsbridge, Mayfair, Belgravia and Chelsea experienced a return to the growth last seen in September at 1.8%, just before the credit crunch started to bite. One Knight Frank office in the area reported December to be their best month for sales in the entire year, with overseas buyers continuing to be the dominant purchasing force. The lower end of the prime market – properties priced at between £3 million and £7 million – remained fairly slow. Knight Frank is predicting 3% growth in prime central London properties for 2008 with the ‘super-prime’ sector showing increases of between 5% and 10%, supported by foreign investors, many of whom have cash and are not affected by the credit crunch. ‘Prime central London figures of 1% growth appear to buck the trend of recent months,’ said Liam Bailey, head of Knight Frank’s residential research. ‘The quarterly figure also supports the notion that this particular market is steadying with growth slowing just 0.2% to 1.4% over the quarter.’ Bailey believes that the Bank of England’s decision to cut base rates by a quarter point at the beginning of the month may have had an effect in encouraging the December upturn, and another cut, widely expected, would help to underpin the market. But he attributes the strength of the market to the continuing effect of City bonuses, even although they have been reduced this year by more than 25% in some firms. ‘Of those who did receive end-of-year bonuses many are thought to have done so in some form of stock. They may now decide it prudent to wait until market conditions show distinct signs of improvement before venturing once more into the market,’ Bailey said. But he warns that it would be unwise to suggest that London’s prime market has weathered the credit crunch on the back of these December figures alone. He believes that tightening economic conditions will continue and this may well result in job losses across the City. ‘If this is the case it will inevitably lead to property purchases becoming a discretionary as opposed to investment-making process,’ Bailey said. With an increase of properties coming onto the market it is now a buyers’ market, prices are being negotiated down, and purchasers are becoming increasingly demanding. ‘They are able to demand perfection for their money. Anything that falls short of this is leading vendors to renegotiate on price to achieve a sale,’ said Bailey. Savills, too, reports a flurry of activity in the last weeks of 2007 with some £66 million worth of country house properties changing hands. On the Friday before Christmas its country house department exchanged contracts on seven major deals. These ranged from two private estates totalling 5,600 acres, to the Somerset house of Mike Oldfield of Tubular Bells fame, and one property that was snapped up on the spot by the first viewer. Over half these sales were private, and included several high value properties in Surrey and Berkshire. ‘These seven exchanges from £3 million upwards on a single day in the busy pre-Christmas period are but one indicator of the continued strength of the prime UK residential market,’ said Crispin Holborow, head of Savills country house department. He said that this was by no means unusual, citing two weeks in November when the firm sold 14 houses worth more than £70 million, with some achieving well over the guide price. But unlike prime central London properties sold by Knight Frank, many of which are bought by foreigners, Savills’ country house buyers were largely UK based, either individuals, trusts, or investment companies. Savills is optimistic for 2008, too, saying ‘high end activity of top quality country houses continues to be encouraging’. |
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