Compare and contrast.
New mortgage approvals for homebuyers in the UK fell by 16% in October, according to the British Bankers’ Association. That brought the number of monthly mortgages written by banks down to a 17-month low. Remortgages have fallen even faster in recent months:
This is the latest sign that the UK’s superheated property market may be finally cooling down. This summer, Bank of England governor Mark Carney said that rapidly rising house prices were pushing “the limit of our tolerance,” and introduced a range of measures to restrict the riskiest types of mortgages.
Even if property prices may be plateauing, these restrictions are making it harder for lower-income buyers in pricey areas to get on the property ladder, which basically describes every young person in London.
But one group in the capital that isn’t feeling much of a pinch—those who are buying so-called “super prime” properties. Sales of homes worth at least £10 million ($15.7 million) in London are up by a third so far this year, according to a new report from consultancy Knight Frank (pdf).
These well-heeled buyers generally don’t need to borrow to buy their properties, but even in the rarefied air of the super-prime segment there are signs of greater thrift—of a sort. Knight Frank says that sales have picked up recently after sellers cut their average asking price by 5% to 10%.
That can represent a huge amount of money in absolute terms, even if the difference between a £11 million or £10 million home is academic to the average homebuyer.
What’s pushing up the top end of London’s already lofty property market? “The Russsians are back,” notes Tim Wright of Knight Frank. Seeking safe assets in which to invest their rapidly depreciating rubles, Russians accounted for 21% of super-prime London sales over the past six months, up from 13% in the previous six-month period.
This is proof—if any more was needed—that the people who can still afford homes anywhere near central London live in a different world, both literally and figuratively, from pretty much everybody else.
It’s harder for the average Brit to get a mortgage, but “super prime” London sales are soaring
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