The debt crisis of European countries or political instability does not affect this housing market in any way – the situation here is determined by foreign buyers who invest in London real estate to save their capital.
More than half of the properties in London's luxury housing sector worth more than 1 million pounds are owned by foreigners. The interest of wealthy Russians in such real estate has increased due to the economic uncertainty that arose in 2008. Active price growth in London is often associated with an increase in demand from foreigners, while there is a shortage of offers. Buyers of real estate in the luxury segment have to wait for interesting offers to appear on the housing market.
Now the demand from the central areas of the British capital is moving to the south-west. A square meter in the elite quarters of London costs an average of 10,000-25,000 pounds.
How to get there
easyJet, British Airways, Aeroflot and Transaero airlines operate direct flights from Moscow to London. Only British Airways operates direct flights from St. Petersburg to the British capital. The journey time will be about 4 hours. You can also get to London with transfers.
London Real Estate market
The rapid growth of London as a global financial center has affected the city's housing market, especially in the luxury real estate segment, where prices are rising very rapidly. Currently, in the central regions, which are most in demand among foreign investors, there is a significant imbalance between supply and demand. And many buyers are now considering areas outside the center, sometimes in the suburbs.
According to the Global Property Guide portal, from 1996 to 2007, there was a significant jump in prices in the London housing market - real estate in the city rose in price by 310% (238% in real terms). Prices in the London real estate market peaked in 2007, then due to the crisis in 2008, the growth rate began to slow down. After the crisis, the price decline lasted for about a year, and then began to gain momentum again.
Despite the fact that in March 2013 stamp duty on objects worth more than 2 million pounds increased from 5% to 7%, demand and price growth continued. According to Knight Frank, prices in such prestigious London areas as Kensington, Knightsbridge and Chelsea are now about 60% higher than in March 2009, when the financial crisis reached its peak. Some experts fear the formation of a bubble, while others consider such growth to be quite natural.
There is a big gap between the London property market and other areas of the country. According to the large British portal Rightmove, in October 2013, the average cost of housing in London increased by about 10% compared to the previous month, and the average price of an object during this period increased by 50,000 pounds - from 439,700 to 544,200 pounds. For comparison, in the UK, the cost of housing is two times lower than in London, and is about 252,400 pounds. Prices are rising rapidly for both new buildings and second homes. Such growth, according to experts, is caused by increased interest from foreign buyers and limited supply.
About half of all properties worth more than 1-2 million pounds are bought by foreigners, who either rent out these facilities or they are empty for most of the year. Experts from the large British real estate agency Savills note that the number of foreigners in this housing market is now growing. Thus, in 2005, the share of foreign buyers accounted for 23% of the total volume of transactions, and in 2012 it increased to 38%. Investors from China and other Asian countries, Russians and residents of rich Arab states are most active.
Where to buy
The most expensive and prestigious areas of the city are located in the center, west and south-west of London.
The most prestigious areas to buy are Kensington, Chelsea, Knightsbridge, Westminster. The apartment has an area of about 100 sq. m. apartments here cost an average of 2-2.5 million pounds, townhouses – about 4-5 million pounds, houses – about 13 million pounds. Given the high traffic density in central London, the proximity of the metro can significantly affect the cost of the facility.
Less expensive properties are being sold in the Hampstead and Regent's Park areas north of central London and in Richmond and Kew Gardens in the south of the city. The cost here is about 20% lower than in the center.
Houses on the banks of the Thames are not much appreciated by residents of the city, as the ecology of the river is constantly deteriorating. One of the areas on the Thames coast that is now popular with buyers is the Docklands area in the south-east of the city. Not far from here is one of the business centers of the British capital - Canary Wharf. Many modern houses in the Docklands area are considered very prestigious, but the British do not give this status to the area itself. The most dynamic construction in London is underway here, and the development of the infrastructure and transport system of this area was especially active in connection with the 2012 Summer Olympics. In this area, people buy mainly those who want to buy luxury housing, but not at such high prices as in the city center.
There is another side to the London property market. Economy class real estate is sold in areas such as Hackney or Camden, where a house can be bought even for 150 000 – 200 000 pounds sterling. These areas are relatively close to the center and do not look at all like a typical London. If you buy a house to live here, then you need to be prepared for the fact that these areas are populated by migrants of different social composition, and large families of immigrants from different countries live here.
It is not recommended to buy real estate in such areas for the purpose of investment, for this it is better to invest in student blocks. Such investments can bring significant income, and the cost of one unit, for example, in Liverpool, will cost about 100,000 pounds.
Some Russians are beginning to show interest in buying real estate outside London, where apartments cost from 300,000 pounds and houses from 500,000 pounds.
HomesOverseas.ru thanks Elena Utyumova from
HomesOverseas.ru