Prices soar at their fastest rate for two years

A significant numbers of buyers with more than a million pounds to spend are sending house prices soaring at their fastest rate for two years, particularly in the most desirable parts of London.

Prices in the capital have increased by nearly 10 per cent in as many months, and it is predicted that they could go up by twice that amount in 2007, as record City bonuses and a shortage of properties for sale inflate the market further.

Competition for the few available properties in the “right” areas is so fierce that houses are going for hundreds of thousands more than the original asking price, and buyers are having to submit sealed bids to secure their new home.

There are a new wave of people — many of them with well over £1 million to spend — who want to “buy to live” in Central London, rather than “buy-to-let”. This has put even more pressure on the housing stock as fewer homes are becoming available to rent. The result is that prices in Kensington & Chelsea have risen by nearly 2 per cent this month alone, with the average cost of a home in the borough now £648,100, according to figures released by the property data company Hometrack.

The Centre for Economics and Business Research has predicted that City bonuses will rise by 18.3 per cent to a total of £8.8 billion in 2007, with an estimated 4,200 employees expected to receive more than £1 million.
An influx of buyers from abroad is also having a big impact on the market in the capital. Strong global economies and a raft of decent City bonuses have meant that there are lots of people wanting homes in London. Overseas buyers all want homes in Kensington, Chelsea and Belgravia.

Some lenders are also offering City workers loans now on the strength of last year’s bonuses.

Your home may be repossessed if you do not keep up repayments on your mortgage.
Article date: 12.06