The last domino in the housing market has toppled. Luxury properties had seemed immune from the woes affecting everything else, but not anymore. Last week the sale of London’s most expensive apartment fell through just days before completion. The 6,000-square-foot, five-bedroom home in Knightsbridge was put on the market for £36m earlier this year. Contracts were exchanged in June on the property that comes complete with its own spa, pool, gym and views of Hyde Park. But now the owners are preparing to relist it at £33m – 8% less. Overall, prime central London property is down 12.3% from its peak last year and “we expect values will fall further over the coming 12 months as the financial crisis turns to wider recession”, says Savills latest research report.
And it’s not just in London that luxury homes are starting to follow the rest of the market down. Several large country estates have failed to sell this year and yet more have sold for millions below their asking prices as the world’s wealthy tighten their belts.
Take Thornhill Park in Dorset. It was put up for sale in November 2007 with a £12m price tag. The eight-bedroom property, set in 104 acres of grounds, was considered so exceptional that The Daily Telegraph dedicated an entire article to it in June where it was described in gushing terms as “the kind of property money can’t usually buy”. However, money did eventually buy it four months later – for £2m less than the asking price.
Then there’s Encombe House. This was described as “an exceptional and entrancing place” by Mark McAndres of joint selling agent Strutt & Parker when the 2,000-acre Dorset estate went on the market in September for £25m. But even being one of the country’s few coastal estates isn’t enough to attract a buyer in today’s market. The Grade II-listed, 13-bedroom house remains on sale three months later, with the agents accepting that a price drop is likely.
So, with the full effects of a global recession set to hit us in 2009, the coming year looks likely to be a bleak one for the prime residential property market.