London Luxury-Home Prices Decline for First Time in 16 Months
London Luxury-Home Prices Decline for First Time in 16 Month
Jason Alden/Bloomberg
Values have climbed more than 23 percent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound.
Values have climbed more than 23 percent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound. Photographer: Jason Alden/Bloomberg
Luxury-home prices in central London declined in July for the first time in 16 months as the recovery persuaded more owners to sell, broker Knight Frank LLP said.
Prices of properties costing at least 1 million pounds ($1.56 million) fell 0.5 percent from June, the London-based real estate adviser said in an e-mailed report today. They rose 17 percent from a year earlier, the smallest gain since February.
Values have climbed more than 23 percent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound. The British currency’s 6.3 percent appreciation against the euro this year has reduced demand from Europeans, while owners are becoming too optimistic about the prices their homes will fetch, the broker said.
“Expectations of vendors are still very high after the rise in prices,” said Andrew Giller, who heads London property searches for The Buying Solution, an arm of Knight Frank that advises and acts for wealthy buyers. “People have been rejoicing slightly too early.”
The luxury slowdown mirrors the broader U.K. housing market. Liam Bailey, Knight Frank’s head of residential research, predicts that a drop in the second half will cut the 2010 gain for luxury homes in central London to 5 percent.
Sale prices of residential property in England and Wales rose 8.4 percent in June from a year earlier, down from the 9.7 percent annual gain in the previous month, according to Land Registry figures released July 28.
Too Expensive
Bailey estimates that some sellers are overpricing luxury homes by as much as 10 percent. Another sign of “over-ambitious pricing” is that sales are achieved at 95 percent of the asking price, down from 97 percent in May, he said.
The number of luxury properties for sale has increased by 7 percent since May, while the higher costs of purchasing a home in neighborhoods such as Chelsea, Belgravia and Kensington caused the number of buyers to fall 8 percent, the broker said.
Some potential purchasers have chosen to rent instead, lifting rents for prime homes in central London by 9.2 percent in the second quarter from a year earlier. The number of prime rental homes fell 64 percent in the past two years as owners decided to sell, Knight Frank research shows.
Properties priced at 3 million pounds to 5 million pounds were most affected by July’s drop in values after they had the biggest gains in the past 15 months. Overall, values are still 6.1 percent below the March 2008 peak, the broker said.
Knight Frank compiles its luxury-homes index from estimated values of properties in the Mayfair, St. John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighborhoods of London.
To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net
Rate this Page