London luxury-home prices continue to rise

Luxury-home prices in central London gained for a 14th consecutive month in December as overseas buyers sought safer investments and competed for a smaller number of properties for sale, Knight Frank LLP said.

Values of houses and apartments costing an average of £3.7 million ($5.7 million) rose by an average of 0.8 per cent from a month earlier, the London-based broker said in a report on Monday. Prices are now 7 per cent higher than their previous peak in March 2008.

“Demand for prime London property in 2011, despite uncertainty resulting from the euro-zone debt crisis and on-going global economic uncertainty, outpaced supply and led to strong price performance,” said Liam Bailey, head of residential research, in the report.

Euro-area leaders are besieged by a sovereign debt crisis that began with Greece in 2009 and has spread to Italy, risking a recession in Europe. The International Monetary Fund will probably cut its forecast for global economic growth as the European debt crisis worsens, Managing Director Christine Lagarde said last week.

Values gained 12.1 per cent in the year through December. Prime central-London prices have risen around 40 per cent since the market’s low in March 2009, Knight Frank said. UK home prices fell 0.9 per cent in December to a 30-month low, according to a January 6 report by Halifax, a unit of Lloyds Banking Group Plc.

The number of new instructions to sell in neighbourhoods such as Knightsbridge and Belgravia fell 6 per cent in the fourth quarter compared with a year ago, Knight Frank said. The broker didn’t specify the number of properties for sale.

“Tight supply has remained a feature of the prime central London property market through 2011 and we see little reason why this might change materially in 2012,” said Camilla Dell, founder of Black Brick Property Solutions LLP, in a separate report.

Her London-based company, which advises luxury-home buyers in southeast England, helped a client acquire a 7.85 million-pound apartment in The Lancasters development in December, according to the report.

The Lancasters, a city block of 1850s townhouses overlooking Hyde Park, was developed by Northacre Plc.