Bloomberg News

London House Prices Surge Most in Two Years to Record High

October 17, 2011

(Updates with Savills report in sixth paragraph.)

Oct. 17 (Bloomberg) -- London home sellers raised asking prices by the most in two years in October, pushing values in the capital to a record.

Asking prices rose 5.2 percent from September, when they increased 2.4 percent, Rightmove Plc, Britain’s biggest property website, said in an e-mailed report today. That’s the biggest climb since October 2009 and takes the average price to 450,210 pounds ($710,000). Separate data from Rightmove showed national home values gained 2.8 percent in October.

Demand in London has been boosted by cash-rich buyers with large deposits who are benefiting from cheap mortgage rates. Rightmove said last month that prices in the city are also being supported as Europe’s debt crisis encourages investors to seek less-risky assets.

“If prices are perceived to be rising, then buyers are afraid that their dream home could move out of their reach unless they act quickly,” Rightmove Director Miles Shipside said in a statement. “This should drive higher volumes of transactions.”

Asking prices in Kensington and Chelsea, London’s most expensive district, rose 6.6 percent on the month, Rightmove said. The average price in the area was 1.92 million pounds.

Real-estate broker Savills Plc said in a report on Oct. 14 that the number of London houses and apartments that sold for more than 5 million pounds in the nine months through September rose 31 percent to 262 compared with a year earlier. Overseas buyers make up 65 percent of the market for homes in that price bracket, according to the report.

National Prices

In its report, Rightmove said the gap between prices in the north and the south of the country is now at the widest ever, with average values in the south at 336,743 pounds, more than double the north’s 164,347 pounds.

National asking prices rose 1.2 percent in October from a year earlier to an average 239,672 pounds, it said. In London, prices were up 7.5 percent on the year.

In the U.K. capital, all 32 boroughs saw prices rise in October. The number of homes being put on sale in the city during the month dropped 14 percent to 15,927 compared with October 2010, and Rightmove said a shortage of properties for sale is supporting values.

“That is likely to be one of the key factors behind this month’s new sellers pitching their asking prices at an all-time high,” Shipside said.

Still, he noted a risk that soaring prices may cut many people out of the market and that “sellers will find that their increasingly lofty price aspirations are not being met.”

Nationally, 6 out of 10 regions in England and Wales tracked by Rightmove showed monthly increases in October, with gains led by London and a 4.5 percent rise in southeast England. Values fell 3.1 percent in the East Midlands.

--Editors: Eddie Buckle, Jennifer M. Freedman

To contact the reporter on this story: Fergal O’Brien in London at fobrien@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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