Italians Rush To Buy London's Luxury Homes

Italians have replaced Russians as the biggest foreign group buying luxury London homes.
Research by property firm Knight Frank discovered that Italians accounted for 7.3% of all purchases in January and February.

It represents a significant increase on the 2.1% of transactions made by Italians in the same period last year.

And it nudges the Russians, who made 7.2% of purchases, into second place in the index, which covers homes worth an average £3.7m.

Analysts said overseas investors are turning to prime London real estate to preserve wealth in the face of political, economic and financial upheaval in their home markets.

Some 3% of purchases over the last two months were by Greeks, whose debt-laden nation is at the core of the eurozone crisis, pushing Greece into the top five biggest foreign buyers of London luxury homes.

The index covers the 13 most expensive areas of central London, including Belgravia, Chelsea, Knightsbridge, Mayfair, Notting Hill and St John's Wood.

It found that the average price of luxury residential properties in these locations rose by 0.7% in February.

Over the last year, prices rose by 11.6%, while sales volumes have risen by 85%.
Liam Bailey, Knight Frank's head of residential research, said: "The rationale for the revival has been well rehearsed: weak pound, plus capital flight, plus rising global wealth, minus thin supply, equals rampant price inflation.

"There is much truth in the above formula, and a careful examination of transactional market data confirms that the process seems to set to deliver further growth, at least in the short term.
"The most telling sign of this shift in investor attitude came in January when Italian purchasers became the biggest foreign purchaser group, replacing Russians who have held this position for several years."

Prices of London luxury homes have risen by 43% since the low recorded in the aftermath of the collapse of Lehman Brothers during the 2008/9 financial crisis.

Just over 250,000 homes in the UK are worth more than £1m while about 74,000 are worth more than £2m.

A study published by the Centre for Policy Studies think-tank argued that any Government plans for a 'mansion tax' should be scrapped.

Researchers found imposing a 1% tax on homes worth more than £2m would bring in £1bn of tax revenues at most but cause significant problems.

The extra tax would "unfairly target the income poor, equity rich" who had lived in their homes for decades, said the report.

The Liberal Democrats are strong proponents of a mansion tax, which could be included in Chancellor George Osborne's Budget later in March, but it is not favoured by the Conservatives because it would hit wealthy and influential Tory voters.

Almost a third of London homes worth more than £2m have been owned by the same family for 10 years or more.

http://news.sky.com/home/uk-news/article/16182622