Euro Crisis Fuels Luxury House Price Rises
Wealthy investors seeking a 'safe haven' from the eurozone crisis are pushing up the price of luxury homes in central London - although a euro break-up could send prices crashing down, research has found.
A new report has revealed that cash flows from worried investors searching for a safe place to keep their money have driven a 75% price increase in London's most expensive properties since 1995.
The phenomenon, also driven by the exchange rate of the pound and global equity prices, has intensified over the past four years due to the eurozone crisis, amid fears over the future of the single currency.
The findings from property firm Development Securities cover seven postcodes in the capital - including areas such as Kensington, Chelsea, Marylebone, Westminster, Mayfair and St John's Wood.
The average price of a property in these areas stands at £1.2m - almost six times the national average.
According to the report, foreign money accounted for 60% of prime property acquisitions between 2007 and 2011.
Development Securities chief executive Michael Marx told Sky News that the price increases were being driven from investors inside and outside the eurozone - particularly those in Russia, China and Singapore.
He said: "Investors globally who were looking at the euro as a place where their money would be safe are now thinking there would be some jeopardy and are looking to invest outside the euro.
"There's a global impact when the euro is in the crisis that it is in, it's not just limited to eurozone countries."
The report goes on to warn that a full break-up of the euro, as being contemplated by EU officials, could diminish the safe haven factor linked to London, causing prime house prices to fall by up to 50%.
In this 'worst-case scenario', sterling would appreciate against the newly formed currencies, global property markets would tumble and, once the crisis had passes, investment would flow out of London and into cheaper European capitals.Despite the double-dip recession, prime house prices in London have risen by 34% relative to the rest of the UK over the last three years.
what do you think?
Likely story, more evidence of the super rich prospering while everyone else is suffering.
you beat me to it ,my thoughts exactly.The peasants always suffer , in this euro meltdown the rich are still prospering .
The government ought to crack down on non-doms and restrict who can claim that status. If you want to live in Britain you should pay your taxes in Britain. If it means fewer foreigners want to buy expensive properties and the top end of the market falls, so be it.