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London property outperforms New York - 5 September 2006

The Quarter 2 report highlights ongoing market buoyancy in the UK, with national house price growth set to reach 7% by the end of the year.  Prime residential property in London is priced on average at £1,200 per sq ft. This overtakes a slowing New York market, where average prices currently sit at £1,000 per sq ft.

At the very top end of the super-prime scale, an apartment at Candy & Candy’s Chesham Place development has set the record for new build with a price of more than £2,800 per sq ft, whilst a second hand property at Chelsea Square sold for approximately £3,000 per sq ft.

In contrast, the Penthouse at New York’s 15 Central Park West sold for c. £2,300 per sq ft and the triplex penthouse in the Pierre Hotel, one of the most prestigious properties on the New York market, has an asking price of £2,700 per sq ft.

In stark contrast, the young Dubai market records prime prices below £200 per sq ft, indicating a development area which, although one of the most active in the world, has yet to reach the prime prices recorded elsewhere.

Steepest price rise for six and a half years

In the UK, CB Richard Ellis Hamptons International say that it is likely London will continue to outperform the rest of the country and a recent RICS report reveals the steepest rise in London prices for six and a half years.

Meanwhile, the highest growth rates outside of the capital have been identified in Northern Ireland and Scotland, at 13.2% and 5.8% respectively. Although growth rates in England are less differentiated, East Anglia has the highest growth of 3.7%, whilst the North West is lowest at only 1.4%.

CB Richard Ellis Hamptons International indicate that average house prices during the first half of this year have increased by £10,000. Comparably, net mortgage lending is hitting a high of £50.8 billion this quarter, marking a 25% increase from the same period in 2005, when net lending peaked at £41 billion.

The upward pressure on prices results from a major imbalance between buyers and sellers. Whilst the number of instructions has been falling 5% year on year, the number of new applicants has increased by 35%.  Meanwhile the investment market has experienced a similar pick up in activity with a record 152,000 buy-to-let advances so far this year, an increase of 17% from the first half of 2005.

Jennet Siebrits, Head of Residential Research at CB Richard Ellis Hamptons International, believes that future market prospects will remain positive:

“The findings of our Quarter 2 review indicate that the economic backdrop will remain stable and, combined with the current high levels of mortgage approvals, suggest that residential market activity will remain strong for at least the next few months.”