London House Prices Rise as Property ‘Hot Spots’ Surge: Economy
Prices in the U.K. capital increased 1.2 percent to an average 483,709 pounds ($769,600), the operator of Britain’s biggest property website said in a report today. Properties in the city’s nine most expensive districts -- where average prices exceed 600,000 pounds -- surged 3.4 percent. Nationally, values fell 2.6 percent.
“The prime central London property market continues to attract wealthy foreign buyers,” said Miles Shipside, commercial director of Rightmove. “This is especially true in the international property hot spots of the City of Westminster, where a Mayfair or Belgravia address is a prerequisite for the world’s wealthiest. The best of London is increasingly in ‘international only’ reach.”
London’s most expensive districts are attracting buyers looking for safer investments, and luxury-home values are now 16 percent higher than their previous peak in March 2008, according to property consultant firm Knight Frank LLP. International buyers accounted for 41 percent of London houses bought for at least 1 million pounds in September.
London continues to buck the trend nationally, according to Rightmove’s data. The decline in asking prices in England and Wales this month was the biggest in almost a year and left the average at 236,761 pounds. From a year earlier, national prices were up 2 percent versus an 8.8 percent gain in London.
“There’s a two-speed market” and it “remains patchy,” Shipside said. Still, he added that there are signs of stability, noting a 20 percent year-on-year increase in search activity on the Rightmove website and a 9.2 percent rise in mortgage approvals over the last quarter.
This “may indicate a sounder springboard for 2013 as the wait goes on for a sustainable recovery in transaction numbers,” he said.
The property market may be supported next year by the Bank of England’s Funding for Lending program, aimed at boosting credit availability. Still, with jobless claims rising and signs emerging that the economy may contract this quarter, consumer confidence remains subdued. Governor Mervyn King offered a downbeat assessment of the economy last week, saying the outlook remains “challenging.”
“The housing market seems to be set to improve a touch in 2013 as the effects of the BOE’s Funding for Lending program will start to filter into the economy,” Annalisa Piazza, an analyst at Newedge Group in London, said in an e-mailed note. “However, we rule out a sharp acceleration in activity and prices as housing-market conditions are still very far from the boom seen before the last deep recession.”
Elsewhere, the Organization for Economic Cooperation and Development said Southeast Asia is emerging resilient from a period of global turmoil, with rising investment and domestic consumption that will propel growth in coming years.
Indonesia’s growth will average 6.4 percent from 2013 to 2017, the OECD estimated in a report yesterday, equal to that recorded in the two decades before the 1997 Asian financial crisis. The Philippines will expand about 5.5 percent a year, up from 5 percent in the decade through 2012. Malaysia and Thailand will see gains of about 5.1 percent, the OECD said.
Europe’s debt crisis and a slowdown in advanced economies have had a “limited” impact on Southeast Asian nations. with most of the effect experienced through trade, the Paris-based OECD said in the report.
Euro-area finance ministers will meet in Brussels tomorrow aiming to stitch together Greece’s next aid payment as a sputtering euro-area economy and a spat with the International Monetary Fund cloud efforts to resolve the crisis.
In the U.S., the lowest mortgage rates on record probably helped keep sales of previously owned homes close to a two-year high in October. Purchases of existing dwellings probably held at a 4.75 million annual rate, according to the median forecast in a Bloomberg survey before today’s report from the National Association of Realtors.
-- Editors: Fergal O’Brien, Craig Stirling
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