Central London luxury-home prices unexpectedly rose at the fastest pace in 10 months in February as the British pound’s depreciation helped attract international investors, Knight Frank LLP said.
The average price of a house or apartment in the city’s most expensive neighborhoods climbed 0.9 percent from January, according to an index compiled by the broker. Knight Frank, along with Jones Lang LaSalle Inc. and Savills Plc (SVS), last year forecast that prices would be little changed in 2013 after an 8.7 percent increase in 2012.
“The fall in the value of sterling has increased the appetite for prime central London homes among overseas buyers,” Knight Frank said in a statement today. Prices have risen every month since November 2010, he said.
Investors from overseas are buying London real estate to preserve wealth amid political, economic tension in their home markets. The pound’s lost about 5.5 percent this year against a basket of currencies, a Bank of England index shows, and 18 percent in the past five years.
On March 1, an industry report showed U.K. manufacturing unexpectedly shrank in February and the pound fell to less than $1.50 for the first time since July 2010.
Developers such as Berkeley Group Holdings Plc (BKG) and Battersea Power Station Development Co. are benefiting from efforts of Asian governments to cool their property markets with new restrictions and the weakened pound by marketing their projects overseas. Berkeley, the U.K.’s second-largest homebuilder by market value, sells 40 percent of its properties to people living outside the U.K.
Prime residential prices rose 8.4 percent in February from a year earlier, Knight Frank said. The monthly increase was the biggest since April 2012’s 1.1 percent gain.
The average U.K. home price increased 0.1 percent in February from the previous month, the first gain in nine months, Hometrack Ltd. said in a report today. The number of new buyers registering with agents gained 14.3 percent, outpacing an 8.7 percent increase in supply.
A year ago, Chancellor of the Exchequer George Osborne increased the levy, known as stamp duty, on purchases of homes costing 2 million pounds or more. As a result, the volume of transactions of that size will probably drop by 15 percent to 3,400 in the 12 months through March, Knight Frank said. The broker based its forecast on data compiled by HM Revenue & Customs.
Fewer than half of the luxury homes bought in the U.K. capital last year were purchased with cash, down from about three quarters in 2011, as banks reined in bonuses, Cluttons LLP said in a report last week. A “severely limited supply” of homes means the change has had little effect on prices, according to the broker.
To contact the reporter on this story: Chris Spillane in London at email@example.com
To contact the editor responsible for this story: Andrew Blackman at firstname.lastname@example.org