London prime property now just 5% below 2007 peak
90% of buyers are international
Luxury London property is being buoyed by an increasing number of cash-rich foreigners, who in some cases are willing to pay above the asking price for the best properties the capital has to offer.
The lack of supply means good quality property in areas like Knightsbridge and Chelsea is attracting a flurry of interest as soon as it hits the market. Rich buyers are increasingly engaging in competitive bidding and even gazumping.
"We launched a flat last week and had 50 viewings in two days and are now going to sealed bids," said Charlie Bubear, head of Savills' Knightsbridge office.
Philip Selway at The Buying Solution, a Knight Frank subsidiary, said: "Around 80% of our clients we would classify as 'desperate to buy'. They will pay over the odds if the right property comes along."
He added that prices have risen around 10% since the trough in March, as competition between the search firm's international clients, which number about 90% of total clientele, becomes fierce. "Now prices for the best property are only between 5% and 10% from Autumn 2007 peak." The news comes after agent Knight Frank last month published research showing available stock of prime London property is down 50% on a year ago, while sales volumes rocketed 234% year on year.
Bubear agreed prices have risen by up to 10% this year, but buyers are still looking for a discount from peak.
He said: "I don't think the value of the very best addresses ever really fell, they just never came to the market and still haven't. Sellers are hanging on, waiting for the market to get stronger." Bubear said more domestic buyers have come back to the market, but interest from internationals is still strong. "We are still seeing a good number of Europeans - particularly Italians - and those who switched their cash to sterling are looking at a minimum discount of 25% and when they decide to buy the sales are very quickly transacted." As interest rates remain depressed and the Bank of England shows little sign of raising them, home owners are under no financial obligation to sell. Until interest rates change, homeowners can live in their homes for practically nothing, said Selway.
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