Eurozone crisis driving London house prices crazy
Tuesday 27th September 2011
The Eurozone crisis is driving property prices in central London higher and higher, Knight Frank reported today. The firm said prime London prices have risen 0.6% this month, contributing to an annual growth of 11.4%. That equates to an incredible increase of £1,117 each day over the past year. Since the credit crunch low point in March 2009, central London house prices have now risen 37.2%, and are at a record high at 4.5% more than their previous peak in March 2008.
Liam Bailey, head of residential research at Knight Frank, said the impact of European and global financial market turmoil over the past few months has pushed more buyers into the central London market.
On the demand side, the number of new buyers rose by 7% in the last three months, with viewings up by 25%, and the number of offers being made on properties higher by 24%.
Bailey said: “Sharp price rises over the past two years have not discouraged buyers from entering the market. Growth in demand is easily absorbing stock volume increases without downward pressure being placed on prices.
“Last month I pointed to low interest rates and the weak pound as the key issues driving price and demand growth at the current time – with some buyers from Asia-Pacific for example still able to benefit from an effective 25% discount on 2008 prices. In addition it is increasingly clear that the ongoing crisis in the eurozone, as well as wider global market uncertainty, is helping to support the market.
“The role of central London property acting as a safe haven investment in periods of economic turbulence has been confirmed by the fact that the recent growth in purchases has been overwhelmingly driven by international buyers, with domestic buyers now accounting for only 45% of the central London market, compared to 51% 12 months ago.
“As the market has moved into new peak pricing territory, we have been watching very closely to see whether there is evidence of purchaser resistance to these new levels. It appears that buyer concerns over alternative investment opportunities and the potential impact of European and global economic turmoil is trumping any concerns over the sustainability of property prices in London at the current time.”
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