London : Luxury-home prices in central London rose 3 per cent in the first quarter from the prior three months, the smallest gain since a recovery started a year ago, on expectations of lower bonuses from banks, Savills said.
The average value of houses and apartments costing more than £1 million (Dh5 million) rose almost 17 per cent from the first quarter of 2009, when prices bottomed out after an 18-month slide, according to the London-based property broker.
"Some of the heat has come out of the market," said Yolande Barnes, head of residential research. "We've also yet to see any significant influx of bonus money, suggesting buyers are still keeping their options open."
The British government announced in December a one-time 50 per cent tax on bonuses exceeding £25,000 paid to bankers in the current fiscal year. This was in response to the outcry over their compensation following state bailouts or aid that enabled banks to weather the financial crisis.
Barnes predicts that prices will decline 1 per cent this year, following an 8.8 per cent gain in 2009, as the fragile economic recovery and higher taxes on luxury properties damp buyers' appetite to buy homes in neighbourhoods like Chelsea, Kensington and Belgravia.
