London Luxury Home Prices Buoyant, Defy Broader Property Malaise - Report

Tom Burroughes

1 September 2008

London's luxury homes worth more than £10 million have become "completely detached" from the slowdown in the main market, estate agents Knight Frank say, according to the Daily Telegraph.

"Super-prime" London house prices rose by 2.9 per cent in August alone, pushing annual growth up to 19 per cent, Knight Frank said. As the rest of London grapples with a fourth consecutive month of price falls - sliding 1.3 per cent in August and dragging the price of the average home down by 1.6 per cent on last year - trophy homes in areas such as Knightsbridge and Belgravia are moving into a league of their own.

Liam Bailey, head of residential research for Knight Frank, said: "There are now signs that the gap between this sector and the rest of the market is growing."With price growth accelerating from 1 per cent in July to 2.9 per cent in August, Mr Bailey said it was clear that these homes remain relatively unscathed by the credit crunch.

"Indeed, spiralling commodities and oil prices are continuing to enlarge the incomes of many international ultra high net worth individuals, as well as some domestic hedge fund and private equity chiefs," Mr Bailey was quoted as saying.

In July, Knight Frank had four bidders for an unmodernised property in Eaton Square, Belgravia, which sold for considerably more than its guide price of £7.5 million. Earlier this month, the agent exchanged on a property in Chesham Place, also in Belgravia for £17.5 million.

Mr Bailey said: "Over the past few months, we have noted that 'super-prime' properties worth more than £10 million have proved immune from the downward trends elsewhere. The sector has become completely detached from the rest of the market."

However, for the merely rich - not super-rich - prices for all property under £10 million fell during August, as buyers continue to buckle under the pessimism sweeping the City, particularly regarding bonuses. Transactions are 46 per cent lower than this time last year, with new instructions on the wane and sellers sitting on the sidelines waiting for the market to improve, Mr Bailey said.

Homes worth under £1 million are the biggest casualties, with prices now down 9.2 per cent on last August, as buyers continue to suffer from the tightened mortgage market.