Foreigners make waves 'down-market': David Lawson on how overseas buyers cause prices to rise in areas they rarely consider

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The Independent Online
The tidal wave of overseas buyers engulfing parts of central London appears to hold little interest for most ordinary buyers and sellers. After all, few of us are lucky enough to own a pounds 350,000 apartment in Kensington or a pounds 650,000 Hampstead mansion that would appeal to these foreign moneybags.

Think again, because the jam is spreading. What started as a boom in prime-area prices is insinuating its way into Notting Hill, Fulham, Putney, Battersea, Clapham and Wandsworth. They in turn are passing newfound wealth on to areas such as Islington. It all boils down to the fact that foreigners don't like buying homes outside central London. A few may stray to Docklands but most stick to Knightsbridge, Chelsea and Kensington.

These restrictions apply even to investors on the other side of the world buying an unseen property in which they have no intention of setting up home. They merely want to collect rent and watch the value climb, but feel uncomfortable with any address they don't immediately recognise.

'I've only had one overseas buyer this year, said Andrew Towler who handles homes in Islington for Winkworth. But he has seen a wave of inquiries from another kind of 'foreigner; those crossing the borders from areas like Notting Hill.

Overseas buyers have helped pump up values in places like St John's Wood. One house, for instance, struggled to sell at pounds 420,000 last year after as many as 20 viewings a day. This year it sold for pounds 620,000 to the first applicant, according to agents Winkworth.

The price of a Kensington maisonette is now close to pounds 400,000, enabling owners to swap for a six-bed house and 70ft garden in Wandsworth or Notting Hill. Those with a Knightsbridge address can look forward to as much pounds 1.5m, opening the door to any top-slice suburb outside central London.

This sort of demand is also pushing more modest homes beyond the means of many first-time buyers - even City yuppies with fat bonuses to spend. So buyers have transferred attention to areas such as Notting Hill instead.

The extra layer of demand has, in turn, driven first-timers there to find cheaper places; and the next step after Notting Hill is often across a couple of pages of the A to Z to Islington.

'You can get a big house in Notting Hill for the price of a matchbox in Chelsea, said Giles Hoskins of Winkworth. A good one-bed flat in Notting Hill now goes for pounds 155,000, and an extra bedroom puts the value above pounds 200,000. But the best returns are reserved for those with the foresight and resources to have settled in just the right address back in the Eighties.

Demand from incoming buyers is concentrated around the old racecourse at the brow of Ladbroke Grove. These all back on to communal gardens, are solidly built, and ooze trendiness. Winkworth has a typical two-bed flat in Stanley Gardens on the market for 215,000.

Some young professionals who bought these before the boom are now cashing in and heading for the leafy suburbs of west London. Others, however, just move around the corner. Hoskins says houses in this select area go for between pounds 600,000 and pounds 3m.

In fact, incomers are being given a fierce fight for this property by locals trading up from cheaper flats. 'People tend to discover Notting Hill and then stay in the area throughout their lives, trading up rather than looking elsewhere, said Hoskins.

They may be moving up from two-bed flats now worth around pounds 150,000 in the less desirable zone north of Westbourne Grove, but ever-rising values are beginning to price out locals, particularly those who insist on a fashionable address. And they are breaking with tradition and deserting to Islington.

Barristers, bankers - even journalists - are moving into Blair country, where pounds 150,000 will buy a two-bed flat with an ultra-trendy address close to the Angel. Incomers from Notting Hill are specific about the limits of their search, said Andrew Towler. Premium prices are justified only between St Peter's Street in the north to Duncan Street and Vincent Terrace in the south. They are often selling a large one-bed flat for about pounds 100,000, bought in the early or mid-eighties. With low mortgages, they bid more aggressively for property.

Why the attraction for this small zone hardly half a dozen streets across? A 10-minute walk to the City or a similar stride to the legal ghettos is one factor. A Tube station on the doorstep is another, particularly for women. The canal also adds a premium to the value. But the sight of television crews and newspaper hacks stalking Upper Street for Blair clones has added an extra layer of attraction for the trendies and a lot more profit for those who moved before the boom.

The pressure is beginning to spread - 20 per cent price hikes over the last year diverts buyers to neighbouring streets. A two-bed flat in Myddelton Square, just south of the Angel, recently sold by Winkworth for pounds 105,000 compared with the pounds 90,000 paid seven years ago.

A one-bedder to the north in Lonsdale Square, Barnsbury, fetched pounds 87,000, compared with a pre-boom pounds 77,000.

(Photographs omitted)

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