Housing plots in London’s best districts rose 15.9 percent in the year through March, more than twice the gains for luxury homes, as developers bet that home prices would continue to rise.
Land values surged because of a lack of availability of the better quality sites in London, “coupled with robust house-price growth” which added 30 percent to the value of an average property over the last three years, Grainne Gilmore, head of U.K. residential research at broker Knight Frank LLP, wrote in the report today.
Asking prices for homes in the U.K. capital rose to a record this month as values increased in all but one of the capital’s 32 boroughs, Rightmove Plc said in a statement today. London’s housing market is beginning to show “bubble-like conditions” as buyers bid up prices and take on more debt, the EY Item Club said in February.
Prime central London includes most of central London from Chelsea to the eastern edges of the City of London financial district, according to Knight Frank. Homes there rose by an average of 7.5 percent in the year through March, the broker said in a separate report.
Land values in prime central London rose 4.7 percent in the first quarter, the most since the London-based broker began compiling data for the index in September 2011, according to today’s report.
Lloyds Banking Group Plc plans to avoid funding the development of projects in London’s luxury-home market. The bank foresees losses for investors, John Feeney, the lender’s head of corporate real estate, said in a March 12 interview.
In the U.K., the value of housing plots rose 0.8 percent in the first quarter as supply continued to be limited, Gilmore said in the report.