The housing market in central London operates differently from elsewhere in the country because of the impact of foreign buyers. When the pound was in effect devalued 15 months ago, the money started to flow in. At the same time, the Hong Kong market hit town, bringing thousands of wealthy buyers keen to find a safety net in London. What these buyers want are modern properties where absolutely everything is brand new and working.
At Cluttons London Residential, 65 per cent of the buyers in new developments have come from Hong Kong. Of these, 70 per cent are Hong Kong Chinese. The agency now has instructions to sell more than 2,000 new 'units' over the next two years, which it expects to see snapped up by buyers from the Far East.
These purchasers made up about a quarter of Savills' customers this year. 'They have had a huge impact on the market,' said Tim Wright of Savills' Kensington office. 'If they are looking to invest money abroad, Europe is still in recession and London is a safe bet. They tend to stick to the two-bed, two-bathroom flat between pounds 200,000 and pounds 300,000, or town houses up to pounds 500,000. They always prefer new build, preferably with good security and car parking.'
Figures from the agents Aylesford support this trend. Its average sale price to Hong Kong buyers was pounds 246,500 for a two-bed, two-bathroom flat. Nearly 90 per cent of its buyers were Hong Kong Chinese, and 94 per cent bought a property that was ready to move into, rather than one needing work. Belgravia, Chelsea, Knightsbridge and Kensington are their preferred locations.
It is the Kensington offices of most agents that have led the field this year. Savills has seen turnover rise by 30 per cent. On one day last month it sold a chain of three houses worth nearly pounds 2m, with everyone exchanging on the same day. 'It underlines the general strength of the central London market,' Mr Wright said. 'Prices for Kensington houses have moved 5 to 10 per cent since the beginning of the year.'
There has been demand at all levels, with family houses in the pounds 500,000 to pounds 750,000 range in particularly short supply. Most agents have seen their levels of instructions fall dramatically over the past six months. Cluttons London Residential is down 70 per cent on this time last year - though sales are up 22 per cent. Inevitably this means prices have firmed.
Cluttons had a house in Cranley Gardens, South Kensington, on the market for pounds 350,000. Two competing buyers went to sealed bids, and it was eventually sold for more than pounds 385,000. Another house, in neighbouring Onslow Gardens, was on for offers of more than pounds 425,000 and sold to a Thai buyer for pounds 503,000. And two buyers are competing for a new luxury development in Cadogan Place, where the asking price of pounds 1.45m is already on the table.
'It has been very, very good,' said Mr Wright. 'All agents in central London have had a good year.' Agents at Savills and Cluttons will find out at the end of their own financial years how well their success will be reflected in their pay packets. And their colleagues across the rest of the country can only look on with envy and put their faith in the trickle-down effect.Reuse content