Property prices in London rose 5.5 per cent in the year to January 2013, meaning the average cost of a home in the capital is now £403,000, higher than at the pre-crisis peak of January 2008, according to recent figures from the Office for National Statistics (ONS).
Much of the appreciation has been driven by demand from wealthy foreign buyers, especially those from Eurozone countries whose buying power has been strengthened by the on-going weakening pound. The pound is yet to come close to reaching last year’s highs of £1/€1.28 seen during the summer, before the European Central Bank announced it would do whatever it took to save the euro, thereby triggering the single currency to begin a steady climb against the pound. Even with the current banking crisis in Cyprus denting confidence in the Eurozone, the pound today (29th March: £1/€1.186) is still weaker against the euro than it was at the start of the year (1st January: £1/€1.231).
Similarly, buyers with dollars to invest in London have benefited from an increasingly strong greenback. Since 1st January, the pound has plummeted from £1/$1.626 to £1/$1.521 (29th March).
“On high value London property of a million-plus Sterling, it doesn’t take a huge shift in the exchange rate to make a considerable saving on the price for a foreign buyer with euros or dollars in the bank,” said Julian Walker, an international property consultant. “London property is always attractive to the international market, but the recent wobble in the Eurozone with Cyprus has increased the safe haven status of immovable assets here, hence I’m not surprised by the ONS data.”