Yours for a cool £2m: Average asking price for home in London borough surges to record high as wealthy foreigners from Russia and Asia move in

Published 19th Mar 2012

* Kensington and Chelsea also attracts investors from
beleaguered Italy and Greece
* UK property market enjoys biggest 'spring bounce' in
six years
* But first-time buyers face 'double blow' with end of
stamp duty holiday and 3% target price leap


The average asking price for a home in a London borough has burst through the £2 million barrier for the first time thanks to an injection of wealth by multi-millionaires from Russia, India and China, it emerged today.

The mean cost of a house in Kensington and Chelsea - home to a host of celebrities including Kylie Minogue, Frank Lampard and Christine Bleakley - defied the recession and jumped to a record £2,000,120.

The unexpected upturn is largely down to an influx of super-rich foreign investors who see London as a safe haven for their fortunes because prices rarely fall and Britain's legal system is transparent, experts say.

The revelation came as a report by Rightmove showed that the UK's property market has enjoyed its biggest 'spring bounce' in six years.

But while it will be music to the ears of some, first-time buyers are facing a 'double blow', with the ending of a two-year exemption on stamp duty and a three per cent annual leap in asking prices for their target market.

Rightmove director Miles Shipside said: '[Kensington and Chelsea] has always had a glamorous reputation, attracting buyers from the both the business and entertainment world.

'However, more recently the global super-rich who are seeking a safe haven for their spare cash have helped push prices to new record highs.'

He said good schools, upmarket shops, which include Harrods, and close proximity to the capital's business district are the main draw for foreigners.

He said foreign buyers from 'new-found wealth locations' such as China, India and Russia were the main drivers of the surge, but also nervous investors from Italy and Greece are seeking to protect their fortunes from their own beleaguered economies.

Across Britain, the typical property asking price rose to £236,939 in March, a 4.9% rise over the first three months of this year and the largest first quarter increase since 2004, the Rightmove house price index found.

Meanwhile, London asking prices reached a new high of £455,159, up 7.3% year-on-year.

However, the Midlands, Wales and the North West have seen prices dip year-on-year and the West Midlands recorded the biggest annual fall, with asking prices dropping by 2.9% to £181,925.

Mr Shipside added: 'The traditionally buoyant spring market has combined with a shortage of supply and brisk turnover of property.

'The result is another new record for average asking prices in the capital this month, representing an increase of nearly £600 a week over the last year and underlining London’s continuing property market strength.'

Average asking prices across England and Wales jumped by 1.6% month-on-month in March following a 4.1% rise in February and they are up 2.2% on the same period last year. The 1.6% rise is also the highest figure recorded in the month of March since 2004.

But Rightmove cautioned that the recovery remains patchy and transaction levels are still low, meaning the market is 'very sensitive' to external influences.

The agency also warned of a double whammy for first-time buyers.

Mr Shipside said: 'For a first-time buyer it’s already hard enough to raise the necessary deposit and now, as well as potentially losing between £1,250 and £2,500 in stamp duty exemption, asking prices for their property types have increased by over £5,000 in the last year as well...

'The question is: can the Chancellor afford to spring a surprise and extend the stamp duty exemption?

'If not, what are the potential costs of leaving the UK re-sale property market without any incentives?'

The study said the recent launch of the Government’s NewBuy scheme to help people looking to buy a new-build home may help counteract the removal of the stamp duty concession, but it was of 'little consolation' to those looking to buy and sell existing homes.

Rightmove said the withdrawal of the exemption on homes costing between £125,000 and £250,000 came at a time when its own research showed that 52% of first-time buyers intending to buy in the next 12 months have managed to save between £15,000 and £40,000 for a deposit.

Mr Shipside said: 'It’s a kick in the teeth if you have saved hard, or begged and borrowed a meaty deposit and have just missed out on the bonus of avoiding stamp duty.

'There’s the hope that sellers will take a lower offer to compensate, but that pre-supposes they can afford to do so or there is not a cash-rich investor buyer waiting in the wings.'

He said that with potentially fewer active first-time buyers in the market after the exemption ends 'there will also be concern for the two out of five sellers currently on the market in this price bracket'.

Source: ' ThisIsMoney '

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