Kensington House Prices Surge to Record $3.5 Million: Economy
Asking prices for homes in London surged to a record this month as values in the borough of Kensington and Chelsea rose to an average 2.2 million pounds ($3.5 million), according to Rightmove Plc. (RMV)
Prices in the country’s most expensive district increased 9.1 percent from September, the operator of Britain’s biggest property website said in a report today. Values in London rose 4.8 percent to 478,071 pounds, while the average across England and Wales gained 3.5 percent to 243,168 pounds.
“There is a prime central-London ‘price bubble’ that keeps on expanding,” said Miles Shipside, commercial director of Rightmove. “While there remains a shortage of supply and a stream of foreign buyers looking for safe havens, the bubble will continue to grow.”
While Rightmove said the national rebound indicates the market is not performing “as badly as some feared,” it noted downward pressure from the difficulties prospective homebuyers continue to have in getting a mortgage. The Bank of England and the government are trying to rectify this with a program aimed at giving banks cheaper funds in a bid to boost lending.
Nationally, all 10 regions in England and Wales tracked by Rightmove posted monthly price increases. London led the gains, followed by the West Midlands and the Southeast, both of which recorded increases of 3.9 percent.
In London, the new price level in Kensington and Chelsea exceeded the previous record of 2.1 million pounds set in June.
It’s “partly a bounce after the Olympic-induced activity doldrums,” said Shipside. “Some Londoners, especially those in the upper price brackets, had the option or sense to delay marketing their properties.”
A continued property-market recovery may depend on the outlook for the economy. The Ernst & Young ITEM Club said today that the U.K. will return to growth in the second half of the year, helped by consumer spending, though it still forecasts a full-year contraction.
The London-based group sees gross domestic product falling 0.2 percent this year and rising 1.2 percent in 2013. It previously forecast stagnation followed by 1.6 percent expansion.
Separately, Lloyds TSB said the squeeze on consumers’ finances is continuing, with discretionary real spending power falling 0.9 percent in September from a year earlier. U.K. inflation probably slowed to 2.2 percent in September from 2.5 percent in August, economists said in a survey before a report tomorrow. The Lloyds report said annual income growth was less than that, at 1.7 percent.
The Rightmove report also showed that house prices in London rose 6.2 percent in October from a year earlier. Values in England and Wales were up 1.5 percent on the year.
Acadametrics Ltd. said on Oct. 12 that house prices based on its transaction measure fell for a third month in September as sales dropped 24 percent to about 50,000, the second-lowest level for a September since records began in 1995. The Bank of England said on Oct. 1 that mortgage approvals were little changed in August at 47,665, less than half the monthly average in the decade before the financial crisis struck in 2007.
“After a summer of sporting distractions, optimists may consider lower unsold stock levels and strong pricing to be signs of recovery,” said Shipside. “However, sellers still need to be mindful that the window of opportunity to sell before the traditional winter slowdown is a narrow one and they risk being left out in the cold for months.”
Elsewhere in Europe, Swiss producer and import prices had the first annual gain in more than a year in September as energy costs increased. Prices for products ranging from factory to farm goods as well as imports rose 0.3 percent from a year ago, the first increase since April 2011.
In Asia, China’s inflation was close to the slowest pace in two years in September, giving the government room to ease policies should the economy deteriorate. Consumer prices rose 1.9 percent from a year earlier while the producer-price index dropped 3.6 percent, the National Bureau of Statistics said.
A report this week may show the nation’s expansion slid to 7.4 percent in the third quarter from a year earlier, the seventh straight deceleration, underscoring International Monetary Fund warnings that weakening growth in developed economies is spreading to emerging markets.
At an IMF meeting in Tokyo last week, People’s Bank of China Deputy Governor Yi Gang said that while policy makers will provide “appropriate” stimulus to stabilize growth, the central bank’s main task is price stability and warned that bubble risks remain in housing markets in major cities. China’s Xinhua News Agency cited Yi as saying that the nation has “relatively large room” for use of monetary and fiscal policies compared with some countries.
Retail sales in the U.S. probably rose 0.8 percent last month, economists said in a survey before a report today. An index of manufacturing in the New York region probably rose to minus 4 in October from minus 10.4 the previous month, economists in a separate survey predicted.
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