Desire for luxury property in London pushing up prices

Developers are capitalising on London’s recent growth in high value residential sales, as shown by the number of units in Central London now awaiting planning consent, according to consultants. Following years of undersupply of new homes, there were 6,548 units in Central London awaiting consent in the first quarter of 2013, compared with 3,023 units in the last quarter of 2012, a 116% increase. However, this still leaves the UK’s capital city far short of the Mayor’s target of 20,000 new homes a year, according to new analysis from CBRE.

The desire to live in London has pushed the average price of an apartment in prime central London up to £1.1 million. Despite last year’s changes to stamp duty and rumours of a mansion tax, the hike in sales cements London’s prime residential market as one of the most resilient in the world. The number of transactions involving London homes worth £2 million or more has increased by 48% over the last 12 months.

‘Changes to stamp duty initially had an unsettling effect on the prime residential market. But the enduring appeal of London has outweighed negative sentiment, as shown by increasing sales of high value homes,’ said Mark Collins, chairman of residential at CBRE. ‘In addition to the success of traditional prime boroughs, new build homes are being purchased at an extraordinary rate. In the City alone, 76% of new build properties have been purchased prior to completion, demonstrating the eagerness of buyers wishing to invest in London property,’ he added.

Meanwhile, the latest KKindex , developed by Khalil and Kane to track the average highest achieved sales prices for high specification and unique properties on prime streets within a selection of prime areas in prime central London, shows where the keenest prices are being achieved. It has found that the Lancasters development, on Bayswater Road, just north of and facing Hyde Park, has regularly achieved sale prices between £2,000 and £3,000 per square foot with one sale reaching just under £3,800 per square foot.

Quote from PropertyCommunity.com : “UK buyers accounted for the majority of property purchases in the prime market in London in 2012 but more foreign buyers are snapping up real estate in the UK’s capital city and this trend is set to continue.”

Mayfair has also seen a significant increase in average price per square foot of 35% between the third and fourth quarters of 2012. The sale of the penthouse in the Fountain House development, located on Park Street in Mayfair, was one of the main drivers f this increase which reached just under £5,000 per square foot. Multiple sales on Mayfair’s Mount Street achieved sales of around £3,000 per square foot, further contributing to the significant price increase. ‘Mayfair luxury development averages have therefore demonstrated a catch up with the leading prices in Knightsbridge, where the top price per square foot figures are achieved in One Hyde Park and The Knightsbridge developments,’ the firm said.

The index also shows a considerable dip in Holland Park. The firms say this is due to a lack of sales of high specification on prime streets such as Holland Park and Addison Road. Knightsbridge has maintained its position as the most expensive area on a price per square foot basis, achieving an average £3,600 per square foot in the last two quarters of 2012.