As the Italian economy comes apart at the seams, wealthy Italians have overtaken Russian's as the biggest foreign buyers of prime property in London, a title held by Russians for several years.
According to recent data from Knight Frank, Italians purchased around £408 million worth of prime central London property in 2011, up from £185 million in 2010. However, the firm said that Italian buyers only overtook Russians in January and February when they accounted for 8% of foreign purchases of prime central London property.
According to the firm's director of residential research Liam Bailey this is a clear sign of the capital-flight mentality within the Eurozone.
The prime central London market continues to grow at a blistering pace, with records being set across many metrics. Knight Frank's Prime Central London index for February 2012 shows sales up 85% compared to 2011. Prices, which grew by 0.7% on the month and 11% on the year, are now 8.9% higher than the previous (pre-crash) peak of March 2008, and according to Bailey "have risen at a rate almost double that seen in previous upturns".
"The rationale for the revival has been well rehearsed: weak pound, plus capital flight, plus rising global wealth, minus thin supply, equals rampant price inflation," said Bailey.
Supply may be weak but it is growing, according to the data supply has grown by 10% during the past year, although new applicants (prospective buyers) have grown by 15% during the same period. The data shows supply of homes in the +£5m bracket growing much faster at 34% during the year, although this is hardly surprising as people attempt to cash in on the current insanity. However, while applicants are also growing fastest in this bracket, at a 26% increase over the year, unlike the wider market, supply growth is outpacing demand in the super-prime segment.
- Monday 12 March 2012