The OECD (Organisation for Economic Co-operation and Development) observes that the UK is part of a small group of countries where in spite of property already being over-valued, prices continue to rise. London takes this to baffling extremes. Government statistics say that average deposits on house purchases in London have risen in recent times, together with the percentage of income spent on mortgage repayments falling. London prices are currently 39% higher than at their 2007 peak.
Foreign investors, many from the Far East, have bought up large portfolios of property in some areas, for example Walthamstow, pushing the prices beyond the pockets of their more traditional occupants, but the trend has slowed with the pound’s recent rises against other currencies.
Size of properties has a bearing, so that areas where there are many terraced houses or smaller family homes will never reach the prices of the areas with mansions and large, detached properties with land.
Easy access to the city has pushed house prices up along main transport corridors, and school catchment areas have an increasing impact, as parents seek to move into the areas that have successful schools.
Traditionally, London’s most expensive residential properties have been in the northwest quadrant of the city, and the cheapest have been in the East. Developments in Canary Wharf have slightly altered the pecking order, but Kensington and Chelsea still consistently top the prices tables, with Dagenham and Barking at the bottom.
Having said all this, London price growth percentages are set to lag behind that of other areas in the country. If new stamp duty rates on properties over the five million pound mark are not a concern, now is a good time to buy.
So what are the most expensive homes in London at the moment? A top London estate agent has a house in Kensington Palace Gardens on its books, but is coy about the asking price. Another has an eight-bedroom mansion in Holland Park priced at a cool fifty million pounds, and the W2, SW7, NW8 and N2 postcodes offer an array of homes in the thirty to fifty million pound range.
If you are looking for an up and coming area, they say you should watch out for artisan coffee shops, farmers’ markets and microbrewery pubs. For the mega rich, the signs to look for are commercial properties being converted back to residential use, and excavators creating extra underground space for private cinemas and spas.
Possibly the most expensive house ever sold in London, recently went for a reported ninety million pounds. Built in Mayfair’s Upper Brook Street in 1736, the mega mansion was last a private home in 1937. It has been returned to residential status after many years as a commercial property.
The renovations included the excavation and installation of a spa and leisure complex. The house also boasts a private library, state of the art cinema and a ballroom for two hundred people, along with numerous luxury bedroom suites and mews accommodation for staff.
It is thought to have been bought earlier this year, by a European industrialist, who will have to pay in excess of ten million pounds in stamp duty.
A property market insider says, “You could save all the tax in the world by moving to Switzerland but if you have no life then you might as well be on Mars.” While he uses this as an argument to buy in London, it appears to be a paraphrase of something once said by a very wise man: what will a man profit, if he gains the whole world, and forfeits his soul?
In the face of current world affairs, such conspicuous consumption may be offensive, or it may inspire determination to succeed. Whichever side of the coin you favour, a browse through the up market ‘London properties for sale’ pages is a fascinating eye-opener.
It is in this context of high and rising property prices in central London that many younger professionals have been forced to rent and this in turn has caused increased activity in the lease extension market.