Properties in London appeal to overseas buyers

Despite the wider UK housing downturn, there is a corner of England which continues to boom, on the back of greater demand, particularly among overseas nationals.

This corner of the country is Prime Central London which covers areas such as Belgravia, Chelsea, Hyde Park, Kensington, Knightsbridge, Mayfair, Notting Hill, Marylebone and St John's Wood. The average price of property in these areas is currently £3,968,300 – over 10 times the all-London average, according to property consultants Knight Frank.

Prime central London is a highly desirable place to live; popular with Brits and overseas nationals. There is an array of different types of residential properties, as a consequence of the wide range of residential architectural changes that have taken place over the years. There is a fine mix of houses and flats, from Victorian terraces to contemporary apartments.

Growing demand from rich international buyers is helping to create a new global super class of property in prime central London, including St Johnn's Wood.

Leading St John's Wood estate agents, like Behr & butchoff, Sandfords and Winkworth, have seen a hike in demand for property for sale in St John's Wood as well as property to rent in St John's Wood, especially from European buyers looking to escape the Eurozone turmoil.

Andrew Ellinas, Director of Sandfords, said they have: "seen a surge of interest in property as a result of the Eurozone crisis, with many properties sold over the last month going to cash-rich Europeans as well as those from the Far East."

Historically in Britain, residential property prices demonstrate a distinct spatial pattern over time, rising initially in a cyclical upswing in prime central London, then wider London and the south east, before spreading out over the rest of the country. This is known as the ripple effect.

Despite strong demand for homes in London, the supply of new residential properties coming onto the market in the area remains at an historical low, placing upward pressure on property prices in the capital, despite stringent mortgage lending conditions.

Ed Mead, Director of Douglas & Gordon, said that destinations in prime Central London "are the sort of areas that have been appealing and seem to be going up in value, when everything else has been flat or going down."

Mr Mead added that the appeal of these districts lies in the fact that they are relatively safe areas.

As well as increasing prime central London property prices, rents are also on the rise, which is a highly attractive proposition for buy-to-let property investors.

Unsurprisingly, there is evidence to suggest that property investors are indeed returning to the London housing market in droves, tempted by a sharp rise in rents, increasing property values, a shortage of new build homes coming onto the market and less severe buy-to-let mortgage borrowing conditions.

Gary Patrick, regional sales director of London-based house building firm Barratt London, told the press: "Rental returns and the potential for capital gain in the London property market have been convincing motivators for both domestic and international investors to add to their portfolios."

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