London prime property prices have risen once again on the back of low sales volumes and an extremely weak pound. According to the latest figures from the Land registry, average prices in the Royal borough of Kensington and Chelsea are now in excess of eight hundred thousand pounds.
Which I assume will please the British Government Inc as they point to London prime property prices as evidence of a “recovery,” but the underlying figures are less than pretty. Sales volumes are – although not as bad as end-2008, at close to 50% off normal volumes. The UK now has fewer homes for sale than at any time in the last three years. This is caused by a combination of banks agreeing to delay foreclosures, and unrealistic sellers being discouraged from selling, meaning the estate agent is becoming an endangered species.
20% of all estate agents in the UK closed in 2008, and I don’t see that situation improving on these low level of sales. The weak have already gone, but how soon before the stronger ones succumb to lack of income?
Considering the Euro is at a 30% discount, the sales figures of 197 units are pretty dismal and points to what many are suggesting is the imminent collapse of the Euro zone. Greece’s problems are a drop in the bucket compared to Spain, and there is nothing less than a cover up of massive proportions going on right now.
Banco Santander’s 2009 Annual report has some scary figures in and there are rumors that the only thing keeping them afloat is the Brazilian bubble. If Europe was in any way healthy, European bankers would be snapping up London Luxury real estate left, right and center.
The German banks are exposed to somewhere in the region of E250 billion in Spain, and the real estate market there is being propped up with government infusions of capital from the ECB. But it must come crashing down at some point. There have been so many “debt for equity” swaps, that even the banks do not know how much property they own.
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Very interesting post indeed. Now potential buyers have become more comfortable and taking advantage of price falls. The prime central London market is now perceived as a lower risk environment than it was a year ago. A herd mentality is definitely at play in the perception of market value and competitive bidding is on the rise.