According to the Economic Times, the prices of luxury homes in central London have risen on an annual basis for the first time in 17 months. Estate agents in Kensington, Chelsea and Knightsbridge are happy to report that the sales of properties over the coveted £1 million mark are 1.6% higher this November than November 2008. Kensington property is particularly favoured by bankers who anticipate enviable year-end bonuses. In fact, those working in finance are the primary drivers behind the brief resurgence of Knightsbridge, Kensington and Chelsea property.
Interestingly, the over £10 million property bracket has experienced the greatest improvement, rising by nearly 2% from October to November this year. Aside from the interest in houses and flats from soon-to-be very affluent bankers, the rising price of property in Kensington and Chelsea is due to demand by foreign investors. Estate agents say that the Pound’s decline and a tax-evasion amnesty can be directly attributed to an increased interest from Italian property buyers, who now constitute roughly 50% of European property buyers.
One of the slightly less definable and more abstract reasons behind the popularity of Kensington and Chelsea properties is the Cupcake effect. Apparently, proximity to high-class bakeries has a positive effect on house prices, as cake shops, delis and gastropubs add a special feel-good factor to areas, at least according to the Telegraph. Muir Morton, of Chesterton, says, “These niche boutique shops add prestige to an area, lending a sense of affluence.”
Commenting on whether high-class shops attract property buyers or whether these shop owners choose areas based on the affluence of the residents, James Geddes, of Property Vision, says, “It’s a win-win situation. The shops are well positioned for business, and local residents get the pleasure of a quality confectioner in the area.”
Unfortunately for property owners, while asking prices for central London properties are once again on the rise, actual selling prices are still down from the 2007 property bubble. According to Ed Mead, of Douglas and Gordon, this can be largely attributed to greed. “To get things selling, prices need to be 10 per cent lower. People thought things are frothy like 2007. They are not. Only good stuff is selling for 2007 prices, everything else is well down,” says Mead.
At 0.5%, the sub-£1 million property bracket is the slowest growing price bracket, but if you’re looking to sell your £1 million plus Kensington property, and you happen to live near an exclusive bakery, your chances of achieving your asking price are virtually assured.