London Home Prices Surge as Investors Seek Safety in Property
September 18, 2011, 8:17 PM EDTBy Scott Hamilton
Sept. 19 (Bloomberg) -- London home sellers raised asking prices by the most in seven months in September as a lack of properties for sale and investors looking for safer assets amid financial-market turmoil bolstered values, Rightmove Plc said.
Asking prices rose 2.4 percent from August, when they fell 3.4 percent, the property website said in an e-mailed report today. Separate data from Rightmove showed national home values gained 0.7 percent after a 2.1 percent decline in August.
While values are being supported by record-low interest rates, waning consumer confidence and lenders’ insistence on large deposits are preventing the housing market from gaining momentum. Demand in London has been boosted by cash-rich buyers investing in property amid European financial volatility over attempts to avert a Greek default, Rightmove said.
“London’s buoyant property market looks set for a brisk autumn as buyers chase a more limited choice of fresh properties,” Miles Shipside, commercial director of Rightmove, said in the report. “With the continuing turmoil in the financial markets, and the threat of a Greek default, we are seeing a flight to safe assets.”
National asking prices rose 1.5 percent in September from a year earlier to an average 233,139 pounds ($368,700), Rightmove said. In London, Britain’s most expensive property market, prices were up 7.2 percent on the year to 427,889 pounds.
Supply Squeeze
Six out of 10 regions in England and Wales tracked by Rightmove showed monthly declines in September, with home prices falling 2.8 percent in Wales and 2.6 percent in northern England. Gains were led by a 2.7 percent increase in England’s East Midlands area and London.
In the U.K. capital, 28 out of 32 boroughs saw prices rise in September, led by the southern London suburbs of Sutton and Merton. The number of homes being put on sale in the city during the month dropped 12 percent to 17,966 compared with September 2010, the report showed.
“This is a significant reduction in supply that will maintain the upwards pressure on pricing in the capital if it continues,” Rightmove said.
For the company’s national and London September reports, Rightmove measured 117,061 prices for homes put on sale on its website between Aug. 7 and Sept. 10. That accounts for about 90 percent of the market, it said.
“The continuing lack of attractive mortgage products with higher loan-to-value ratios is stalling a housing market recovery, as first-time buyers or existing homeowners with little or no equity are faced with years of saving to raise the necessary deposits,” Shipside said. “A housing market recovery seems as far away as ever.”
--Editors: Andrew Atkinson, Fergal O’Brien
To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
