London Luxury-Home Values Slide for Eighth Month in November

By Simon Packard

Nov. 29 (Bloomberg) -- Luxury-home values in central London, the world’s most expensive location for prime real estate after Monaco, fell for an eighth month in November as fewer sellers held out over prices.

The estimated average value of a house or apartment in the city’s nine most expensive neighborhoods fell 3.6 percent from October, according to an index compiled by Knight Frank LLP. It was the second-largest drop since the index started in 1976. Property values declined 14 percent from a year earlier, the broker said today. The index covers homes mostly valued at more than 1 million pounds ($1.54 million).

“The last few months have seen vendors gradually accepting that prices need to be cut if a sale is to be achieved,” said Liam Bailey, Knight Frank’s head of residential research. “Further price falls are to come.”

Prime central London real estate has taken longer to register declines seen elsewhere in London because of a standoff between sellers and buyers over price. That ended in September, when the bankruptcy of Lehman Brothers Holdings Inc. caused demand to collapse from those employed in financial services, traditionally the mainstay of demand for expensive homes.

The worst banking crisis since World War I has translated into job cuts and reduced bonuses. October’s 3.9 percent monthly decline in the index set a record.

Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG and the failed investment bank Lehman Brothers are among the companies shedding staff. Job vacancies in London financial services fell 48 percent in October from a year earlier, recruitment firm Morgan McKinley said earlier this month.

Million-Pound Homes

As many as 62,000 finance-related jobs may be lost in London by the end of next year, according to the Centre for Economics & Business Research.

Least affected by the slide in values are properties worth more than 5 million pounds, which dropped 1.9 percent in value from October, Knight Frank said. Their depreciation, coupled with the British pound’s 23 percent slide against the dollar this year, may attract wealthy overseas buyers.

“Many prime properties are unique and only occasionally come up for sale,” Bailey said. For a buyer with dollars, a 15 percent property valuation drop equates to a 35 percent slide when exchange rates are taken into consideration, he said.

London and southeastern England accounted for more than three quarters of sales of million-pound homes last year, according to an index compiled from government data by HBOS Plc. Million-pound homes represented 0.6 percent of the 1.38 million U.K. property transactions last year.

Knight Frank compiles its monthly index from appraised values of properties in the Mayfair, St John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and the South Bank neighborhoods of London.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.