London bankers lead house-price surge

By Brian Swint LONDON, Bloomberg

London house prices advanced in March as buyers snapped up properties at the fastest pace in almost three years, led by demand from wealthy foreigners and bankers. Average asking prices in the UK capital rose 1.8 percent to 366,302 pounds (US$713,000) in the four weeks through March 10, and 22 percent from the previous year, Rightmove Plc, the nation’s biggest property Web site, said Monday. The average home stayed on the market for 65 days, the shortest period since July 2004. “London is the financial capital of the world, and we’ve just got more people looking than properties available,” said Commercial Director Miles Shipside in an interview. He sold part of his stake in Rightmove to fund his own house-hunt in the city. A shortage of properties for sale has driven up house prices even after the Bank of England raised benchmark interest rate three times since the start of August. Rising demand from the city’s richest residents is compounding a supply crunch that central bank policy maker Kate Barker said will probably outlast the current generation. UK house prices rose 1.5 percent on the month, the most in four months, and 12.2 percent on the year, to an average of 228,183 pounds. Values increased from February in each of the nine regions measured by Rightmove in England, led by a 2.6 percent gain in the North, while they fell by 0.3 percent in Wales. The average stock of unsold property per real-estate agent in London fell to 34 in February, the lowest in seven years, the Royal Institution of Chartered Surveyors said March 13.

“The supply problem is extremely bad, especially at the top end,” said Gary French, chief surveyor at the Friend & Falcke agency in Belgravia, an area neighboring Queen Elizabeth’s London residence at Buckingham Palace. “If people with money in Russia, or in the longer term China and India, start to see London as a safe haven, rightly or wrongly, then it will keep prices going right up. We’re not affected by domestic interest rates.” Kensington and Chelsea, the district where film star Hugh Grant lives, led annual gains in London, rising 83 percent from a year earlier to an average of 1,208,981 pounds. The next biggest gain was in Westminster, at 50 percent from a year earlier, followed by a 29 percent increase in Hammersmith and Fulham. Luxury-home prices in London rose at an annual rate of 31 percent in February, the fastest pace since 1979, when Margaret Thatcher become prime minister, real-estate broker Knight Frank said March 15. Interest-rate increases in August, November and January may be discouraging some buyers. The RICS index of house-price growth showed the smallest increase in nine months as the number of people registering to browse property dropped to a two-year low.