London agents Knight Frank are reporting that prime central London property prices are 47.3% higher than in March 2009. Admittedly, that date marked a low point because of all the financial bad news circulating at the time. However if you go back to March 2008 when prices peaked, we are still 12.1% higher now according to Knight Frank.
There are a couple of clouds on the horizon. First of all, the stamp duty rate of 7% on houses worth £2million. This amounts to quite a tidy lump sum on a prestige home in central London and is hardly designed to encourage buyers. Secondly, the problems in the Eurozone. Landlord’s with London properties will know that investors from various Eurozone countries have been keen on London real estate and this has helped to keep the market moving along. If you are thinking of buying additional property ensure it is protected with landlord building insurance.
Knight Frank say that the surge in Greek buyers has fallen off sharply but they are seeing interest from France, Italy, Spain and even Germany. What happens to London property prices if one or more countries leave the Euro is very difficult to predict. Liam Bailey head of residential research at Knight Frank says ‘Any country which seems at imminent risk of ejection is likely to see a massive outflow of capital, some of which will end up in bricks and mortar in London. But if we are left with a small core around Germany, the value of the smaller bloc’s currency is likely to surge against Sterling, reducing demand from those countries”.