UK buyers the driving force behind prime London residential market surge

PETALING JAYA: Despite the revival of international buyer interest, it is the return of the UK buyer that is driving the strong price growth in recent months, particularly those employed in the “City”, according to the Knight Frank Prime Central London Index for October 2009.

“The central London housing market has experienced an extraordinary period in recent weeks. A shortage of property for sale [down 20% year-on-year], a weak pound which has encouraged overseas buyers [overseas prospective buyers have risen 45% year-on-year] and the return of bonuses to the City all contributed to pushing prices up by 2.1% in October, the fastest monthly rate of increase since July 2007,” said Liam Bailey, head of residential research, Knight Frank.

Prices are now 10% higher than the low reached in March 2009, however, they remain 16% below the peak levels of March 2008. UK buyers make up 67% of all £5 million (RM28.32 million) and above buyers in the three months to the end of October, an increase from the 43% in the preceding three months, noted Bailey.

Chelsea, Kensington and Notting Hill led the market rise, registering an increase of nearly 6% in three months, amounting to almost £1,340 a day for a £2 million property. The strongest performing bracket continued to be £1 million to £2.5 million, recording an increase of 5.3% in three months. After a slow recovery during the first nine months of 2009, the top price bracket of £10 million and above has risen by 1.9% in October.

Even though there was anecdotal evidence of rising stock volumes in September, it failed to materialise as the number of new properties being put on the market for sale in October was almost 60% below the level seen in October 2008 and 58% lower than September this year.

Record prices were noted in October with Knight Frank concluding four £10 million plus sales to UK, Russian and Chinese buyers -- three in Belgravia with asking prices of £16.25 million, £17 million and £32 million, and one in Knightsbridge with an asking price of £11.5 million.

Prices for individual properties in Academy Gardens, Kensington, have risen 25% since 2007 as evidenced by the sale of a 2-bedroom flat at £1,832 per sq ft, a notable increase from the £1,400 psf price tag in June 2007.