In the prime London borough of Westminster where average house prices have now returned to pre-recession peak levels, a weak pound means that property is essentially 36 per cent cheaper for buyers with Japanese yen. Investors with currencies such as the Hong Kong dollar, American dollar, Saudi riyal and the United Arab Emirates dirham can expect a discount of around 25 per cent.
Ongoing interest from international investors has resulted in a strong six months for the prime central London market with a pickup in transaction levels and significant average house prices increases of 23 per cent and 20 per cent in Westminster and Kensington and Chelsea respectively.
Domestic high net worth individuals are also expected to return to the market, as prospects in the City start to look up. The emergency budget did not yield any big bonus taxes and the bonus pool expectations for 2010/11 currently stand at £6.8bn.
Supply constraints have meant that areas such as Hampstead, St John’s Wood, Notting Hill and the Southbank are now attracting more attention, as potential purchasers cast the net beyond the traditional ‘golden postcodes’ of Westminster and Kensington and Chelsea.
Jennet Siebrits, head of residential research said:
“The bulk of the London market is trying to dodge the double dip, much like the rest of the UK. However, in what is truly emerging as a tale of two cities, the prime central London property continues to defy the downturn thanks to strong interest from international investors.
“The popularity of prime London property has been buoyed by the international appeal of its universities with many wealthy parents looking to combine an apartment for their children with a good long term investment.
“Interest from domestic buyers has been revived with a broader number looking at mid-sized properties in the Capital. This might be in the form of a personal investment or via a specialist fund that can capitalise on short term lease opportunities.
“While prime properties must be exclusive by definition, the shortage of stock has been exacerbated by the reluctance of sellers to put their properties on the market until values improve and a lack of development over the last two years, which has put upward pressure on prices.”
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