The prices of central London luxury real estate have been predicted to increase by 8% by the end of this year by Savills plc, even though they had previously predicted last November that prices would fall.
This increase is due in no small part to overseas buyers continuing to take advantage of the weak pound. The average prices of homes costing $4.8 million or more in the upmarket nieghborhoods of Belgravia and Knightsbridge, increased by 9.6% in the second quarter from the same period last year, while the quarterly increase was 3.4%.
Although real estate agents are still seeing much stronger demand from abroad, the worry remains as to what will happen in the euro zone.
Foreign buyers are still seeing the U.K. as a safe haven for their wealth, and the fact that sterling has lost 25%v of its value against a number of currencies only makes the real estate here more attractive. Overseas buyers accounted for 72% of the sales of prime London property in the first quarter, up from 60% three years earlier.
Last November Savills had predicted that prices of luxury apartments and homes in London would decline by 1%, as British buyers would be deterred by worsening economic conditions. Some 55% of sales in central London were by British owners, but they are choosing to re-invest their money in the more affordable suburbs within the capital.
Savillls now predicts that property costing more than £1 million pounds will probably increase in value by around 6%, as areas such as the south-west of London become increasingly gentrified. It predicts that the prices of prime residential real estate outside London will fall by up to 3% this year. It predicted a fall of just 1% last November.