London’s 5 year luxury home boom coming to an end

London's 5 year luxury home boom coming to an end

London’s luxury home market has so far been immune to the economic problems that plague the rest of the UK, but perhaps not for much longer.

The latest property news from London-based broker, Knight Frank LLP, is that the luxury home market in London saw a 19 per cent rise in the five years ending April 2013. February 2013 saw an 8.4 per cent rise from the previous year, the largest jump in ten months. Experts believe such increases are unsustainable in the long term.

In addition, it is hardly breaking property news that London is in the throes of a housing shortage and experts in the property market feel that the easing of barriers to development has created an opportunity to expand into the rental sector.

The increase of £220 million to £1 billion in government funding for new-build buy-to-let homes is seen as a means of encouraging large-scale investors to become landlords.

Renting is becoming necessary for an increasing number of families as a result of the difficulties that many people have experienced when applying for a mortgage. The problem is even affecting middle-income professionals who traditionally would have been purchasing their first home but are finding it difficult to raise the deposit or find a suitable mortgage to do so.

Whilst rental properties are usually owned by small scale buy-to-let investors, larger companies and institutions are increasingly looking to move into the area.

Grosvenor is looking to develop homes mainly in the capital, particularly in affluent areas such as Belgravia and Mayfair. It is also interested in other cities, most notably Oxford, Cambridge and Edinburgh.

Others are also investing in the sector. M&G Investments’ retail estate division, Prupim, is finalising the purchase of a number of home rentals in the south-east and London from Berkeley Group Holding PLC in a deal worth £105.4 million.

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