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Number of £2m homes in London hits all-time high
Last updated at 10:43am on 24.04.07
Property boom: the number of £2m homes in London has hit an all-time high
The number of homes on sale in London for £2 million-plus has hit an all-time high of 1,000.
An astonishing two-year boom has pushed a record number of properties into the "multi-million" band. It is being fuelled by foreign buyers attracted by the City's status as the top financial centre.
This, combined with a shortage of prime properties, has triggered "billionaire bidding wars" that are pushing up prices even more.
According to estate agents and most economists there is no sign yet of a crash. Peter Rollings, managing director of west London agents Marsh & Parsons, said: "The top end of the market is frighteningly strong. It is just amazing the amount of money people are charging for homes - you can almost name your price right now."
About 60 per cent of the buyers in top central London locations such as Knightsbridge and Belgravia are foreign, with wealthy Indians the latest nationality deciding that a London property is the "must have" asset.
Liam Bailey, head of residential research at Knight Frank, said the sheer volume of foreign buyers was in itself helping to push the market up.
He said: "If you are a UK buyer, you are generally a seller as well so you are releasing a property into the market. But with foreign buyers, it is all demand, you are not creating any new supply."
Agents have also noticed how wealthy foreigners also tend to hold on to their London bases far longer than the average British buyer - often 20 years or more - again restricting the flow of properties on to the market.
According to Mr Bailey, "the great thing about a London property, particularly if you come from a developing country, is that it's a safe bet. If everything goes badly wrong where you are based, you can always come over to London and enjoy it."
The property website Rightmove.com shows a record 955 homes in London currently being marketed at £2 million or more - with a combined value of well over £2 billion.
With private sales not being handled by estate agents the total is well over the 1,000 mark.
Since December prices have also been bouyed by the £8.8 billion City bonus round.
Hopes of another bumper year in the City are already rising less than four months into 2007. The FTSE-100 is only 500 points from its all-time high.
Latest Land Registry figures show that 209 sales of more than £2 million were completed in London in the first quarter of the year, up from 131 in the same period last year.
Guy Griffin, a property finder specialist in prime central London locations, said that a client had recently sold a house in Ilchester Place in Kensington for £13 million after buying it for a "bargain" £4.75 million in late 2003.
Another property in the W2 area was sold earlier this month for £6.75 million five months after the seller bought it for £5 million.
According to Mr Rollings, property in Kensington that would have fetched £1,300 per sq ft last summer is now up to £1,800 or £1,900 and is nudging £2,000 in the best parts of Notting Hill and Chelsea. One 6,000 sq ft flat in Knightsbridge is on offer for £24 million, valuing it at £4,000 per sq ft.
Mr Rollings said London's reputation has also been helped by a new generation of developers such as the Candy brothers, adding: "Sometimes our bathrooms and kitchens were not up to scratch and US buyers in particular used to complain that there were no power showers. Now the style and qualty of refurbishment is up there with anywhere in the world." The market in central London appears to be relatively immune from the threat of higher interest rates.
A recent survey of buyers by Marsh & Parson revealed that less than half needed mortgages. In one month, 10 out of 11 sales handled through the Holland Park office did not not involve any borrowed-money. Elsewhere in London the frenzy is not quite so intense but double digit annual rises are still the norm in most areas.
Reader views (6)
Here's a sample of the latest views published.
Bob,
Just out of interest how much are these affordable properties you refer to?
The pokey slum flats that I grew up in (and vacated in 1981) at the Elephant and Castle sell for in excess of £200k, so there's little chance of my children or any locals getting on the property ladder without a large slice of fortune. The much vaunted regeneration of the E&C has already started and gain the locals have been priced out of the market with flats starting at around the £280k mark.
As regards to Chris's point, it is believed that two-thirds of all new builds in London in the last ten years have been bought on buy-to-let.
- Mark, London
I know five buy to let landlords who have bought over 50 properties to let out in the past eight years. Around the Country this extrapolates to thousands of homes. These buy to let properties have doubled and tripled in value. The owners (landlords) can simply remortgage and draw out equity without selling the property. Consequently, these properties would not be available for resale for a very long time. I believe this is what is creating a shortage of homes and driving up prices.
First time buyers unfortunately are competing with these experienced investors. Most estate agents prefer to sell to these confident investors who have bought properties previously from them. The risk of these investors failing to complete a purchase is minimal.
Buy to let was not available to underpin the property market in the late 1980's when first time buyers stopped buying. This resulted in the fall of house prices from 1999 to 2005.
Compare this to 2007. Despite the lowest number of first time buyers ever recorded prices have continued to rise.
Therefore I believe property prices are unlikely to fall.
- Chris, London
Dear First Time Buyer
Please stop moaning, there are plenty of houses in run down inner city areas of the UK that you can afford. You just can't be bothered to move there. If you can't afford London then please leave.
- Bob, London
The bubble WILL burst and pricing with fall as quickly as it rose, its common sense really as the average salary can not afford the average house price, that equation seals the fate.
- Brandon Thomas, London UK
Higher, higher, let's get a one bedroom flat in Leytonstone to reach £500,000!
- Grim Reaper, London
The property situation is getting incredibly out of hand. It's become impossible for first time buyer to get on the property ladder now so are resigned to renting. The bubble will burst soon and then we'll all be sorry!
- Stuart, South London
