London Home Prices Surge as Sterling Weakness Drive Demand from Foreign Buyers - Rightmove

Asking prices for houses in the British capital have jumped in March as depreciation of the pound against the US dollar and the euro contributed to increased demand from foreign buyers.

According to a report from the property website Rightmove, asking prices in London, where property is considered as a safe haven by overseas investors, increased by 1.9 percent in March to £496,298 ($750,000/€581,306) from the previous month. On a yearly basis, it represents an increase of 9 percent.

In the capital, Kensington and Chelsea led the price rise with 6.2 percent surge while Lambeth reported 6 percent increase. Prices in Westminster rose 6 percent.

"London's housing market continues to forge ahead with seller pricing power still holding up in spite of the 9 percent jump seen in the last 12 months. This is aided and abetted by the onset of the spring marketing season, with more buyers around and relatively limited property choice in many popular locations," said Miles Shipside, Rightmove's director.

"Overseas buyers transferring their dollars or euros into sterling have found their buying power boosted by nearly 10% since the beginning of the year. Many new build developers have been mining this rich seam of overseas cash very successfully," Shipside added.

Nationally, average property asking price increased 1.7 percent to £239,710 from £235,741 in February, when prices rose 2.8 percent to a five-year high. Year-on-year, prices rose by 1.2 percent in March.

Among other regions, South East recorded a 4.2 percent increase in asking prices, while North and South West had price increases of 2.9 percent and 1.8 percent respectively. Monthly increases were 1.5 percent in Wales, 1.6 percent in East Midlands and 0.8 percent in Yorkshire & Humberside.

On the other hand, asking prices declined by 0.5 percent in West Midlands and were stable at East Anglia.

Rightmove noted that transaction volume is likely to increase in 2013 with a 12 percent increase in new seller numbers yet unsold and an expected increase in buy-to-let activity.

Further, 60 percent of home-movers believe prices will be almost the same in a year's time and a further 23 percent expect prices will be higher, according to Rightmove's latest consumer confidence survey.