Opinion

Sterling's Slide 'Won't Affect' London Property Market

While the sliding value of sterling may have negative implications for the economy and regional property markets, it seems that London real estate will not swayed by the declining value of the pound.

Liam Bailey, head of Global Research at Knight Frank, claims that with the eurozone rumbling on, the UK capital will continue to be seen as a safe haven for investment by foreign investors, ensuring activity remains strong across all sectors. This is evidenced by a 0.4 per cent increase in prime central London prices alone during January 2013.

Analysis of recent figures shows that the rise in sales experienced at the end of the year, following the publication of the draft finance bill and the clarification of property taxation, has continued into 2013. According to Mr Bailey, this is the result of pent up demand seen between June and November 2012, when buyers adopted a "wait and see" approach. What's more, the drop in the value of sterling has actually served to attract foreign investors to London, with euro-denominated buyers' property values falling by four per cent.

"The flipside of this, of course, is that euro-denominated buyers who purchased property late last year have seen the value of their investment fall in recent months. However, as the Eurozone crisis continues to drag on, the long-term appeal of owning property in a 'safe haven' such as London is unlikely to diminish," Mr Bailey wrote.

Knight Frank's latest London Review has revealed that South Kensington is continuing to be popular among international buyers, closely followed by Knightsbridge, Kensington, Hyde Park and Belgravia. Knightsbridge was in fact one of the best performing areas in terms of price growth, enjoying a 1.5 per cent rise last month. Notting Hill also had a positive start to the year, reversing its steady price decline with 0.8 per cent growth.

However, the capital is not entirely immune to the UK's poor economic fortunes and while there will be no significant decline in property values, no considerable gains will be made either. According to Mr Bailey, there will be no notable movement during the year, but in 2014 growth will return once again.

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