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Luxury homes sector forecast to slow in London |
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Tuesday, 24 October 2006 |
THE rise in the cost of London's most expensive apartments and houses may halve next year as the growth in European property prices slows, international real estate advisers Knight Frank LLC said.
The price of homes in London costing more than five million pounds (US$9.4 million) will gain 12 percent in 2007 compared with 25 percent this year, London-based Knight Frank said in an e-mailed report published yesterday, according to Bloomberg News. UK prices will rise six percent next year, down from nine percent in 2006, said Knight Frank.
"This year's bonus round for bankers, traders and fund managers may be the key," said Liam Bailey, head of residential research at Knight Frank. "That is the main driver for prime property prices."
Bonuses paid to employees of London-based financial firms may rise at least eight percent from 2005's record 7.5 billion pounds, the Center for Economics and Business Research said last month. Demand, coupled with a shortage of properties for sale, has resulted in prime London prices rising at their fastest rate since 1997.
The biggest gains next year in the UK outside the prime London market will be in Northern Ireland and Scotland, which have also been the best performers this year, said Knight Frank. There will also be an impact on prime regional markets close to London as cash-rich London-based buyers compete with locals for the best properties, said Knight Frank.
Prices across Europe will slow in 2007 as the impact of higher interest rates makes homes less affordable.
The biggest gains will be in countries in eastern Europe that joined the European Union at the start of 2004, said Knight Frank.
"We are upbeat about prospects in 2007," said Bailey. "With no obvious major international shocks visible at this point in time and a continuing broadly benign economic and interest rate environment likely, we see both buyer confidence and appetite remaining firm."
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Last Updated ( Tuesday, 24 October 2006 )
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