UK luxury property shows first signs of erosion
The UK luxury property market has show its first signs of weathering, after suffering its first monthly fall in three years.
In June, super prime property prices, valued at £10m and above, edged lower by 0.9%. This is the first time prices have fallen since 2005, according to the latest monthly survey from UK high-end estate agent Knight Frank.
Nevertheless the estate agent remains bullish on the high-end property market, seeing as prices are still 22.7% higher than this time last year. Knight Frank said the sector still looks buoyant compared to the lower and mid property market, with properties priced at under £1m plunging 2.3% in June.
Liam Bailey, head of residential research at Knight Frank said: "The market for super prime properties worth over £10m is relatively untouched by the gloom elsewhere, driven by international buyers enriched by the commodities boom.”
But many in the industry disagree with him. The US super prime property market has already sustained hefty losses, with some properties losing as much as a sixth of their value within months.
Commenting on the high end market, Jeremy McGivern, director of property search firm Mercury HomeSearch, told Wealth Bulletin: "There are some overvalued properties in London whose prices have taken a knock, and prices have further to fall over the next year or so. We will get to a point when the difference in price between a mid-market property and a high-end property is so wide that it will make more sense to buy two mid-market properties and convert them into one. Super-prime properties will be affected with only the very odd exception proving to be resilient."
He added that around 60% of buyers for the luxury market are wealthy foreigners, and they are becoming more selective. Many are looking for residences with gyms, swimming pools and concierges within the complex, which few London high-end developments offer.
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