Johannesburg - Bankers swapping London for Paris after
the Brexit vote are moving from a slumping luxury-homes market to a red-hot
one.
A weakening pound has “meant differences in prices
between Paris and London have fluctuated significantly over the last 12
months,” said Databiens, the French unit of property researcher LonRes. “Since
the start of 2016, prices in Paris have begun to rise, whereas in central
London we saw values fall.”
That’s bad news for bankers relocating from London, with
HSBC executives saying they plan to move as many as 1 000 traders to Paris.
Home values in the French capital rose 9 percent in the first quarter from a
year earlier and properties are 22 percent more costly for sterling buyers, the
researcher said. The price surge in Paris marks a turnaround from 2012 through
2015, when values fell there while London’s luxury homes were soaring.
The French presidential election vote may have an impact
on the real estate market as Republican Francois Fillon has said he’ll get rid
of a wealth tax and reduce the amount of time a second home needs to be held
before it’s exempt from capital-gains tax, Databiens director Laurent Lakatos
said by phone.
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Fillon is one of four leading contenders going into
Sunday’s first-round election for the presidency, though polls suggest he lags
behind centrist Emmanuel Macron, who has said he’ll keep a wealth tax on
property. The top two candidates go through to the runoff vote on May 7.
Demand in the French capital has been driven by buyers
seeking to take out 25-year fixed-rate mortgages ahead of any future interest
rate increases, Lakatos said.
The premium for houses and apartments in the UK capital
over Paris has fallen from more than 130 percent in mid-2015 to 71 percent in
March, in part because of sterling’s decline, Databiens said. The pound has
fallen 5.5 percent against the euro in the last year, according to data
collected by Bloomberg.
London home values grew at their slowest annual rate in
almost five years in February as values in the capital’s most expensive
boroughs including Camden and Kensington & Chelsea fell, according to
Acadata and LSL Property Services. A tentative recovery at the top end of the
London market “appears to have fizzled out,” the report said.
Prices across London rose just 0.1 percent in February to
an average 606 780 pounds ($777 650). That left the annual gain at 1.5 percent,
the weakest reading since April 2012.