02 December 2013
They envision building 20,000 luxury homes in the coming decade, up significantly from earlier estimates. Though some market watchers worry that British government programs to encourage home ownership are fueling a price bubble, rising prices are more of an issue for first-time buyers at the lower end of the market.
The global economic downturn continues to weigh slightly on the notoriously recession-proof London market: the 6.8 percent year-over-year increase in luxury home prices in October was the smallest in four years. And developers fear rising building costs could crimp their profits.
However, they still expect to build more than £50 billion worth of new homes over 10 years. And “luxury” has been redefined upward – from £1,100 per square foot last year to £1,250 in 2013.
Wealthy property purchasers could face one headache, though: Tax authorities are considering imposing capital gains tax on non-residents with second homes in the UK.
But while that could dampen demand in the short run and hurt values for current owners, it could create opportunities for well-heeled Britons to add an apartment in a great London locale at a discount.
Meanwhile, the cost of buying London’s most expensive real estate has leveled off. Broker Savills says homes worth more than £15 million have seen almost no price increase throughout 2013 – because many high-end buyers are getting a bit choosier and demanding more value when they buy.