Prime London property is set for a boost over the coming weeks as City bankers hunt down investment opportunities for their bonus payments.
Estate agents say the number of applicants for expensive homes in London has increased by a fifth in the past few months and is set to rise further as bonus decisions are formally announced.
Payouts are expected to be significantly higher than last year, although estate agents say many buyers are playing safe and waiting for confirmation of the sum before committing to a deal.
Nevertheless, Knight Frank has reported a 23 per cent increase in applicants in the last quarter.
“Judging from the calls that we started to get as soon as we got back [after Christmas] the bonus buyer is back and will have a positive effect on house prices,” says Tim Wright, head of Knight Frank’s Kensington office.
Property prices have already rebounded strongly in prime areas, and are even exceeding previous peak levels in some pockets of the markets.
“Not surprisingly, perhaps, in terms of employer, it would seem that JP Morgan and Goldman Sachs lead the way,” adds Mr Wright, “although some still do not know exactly how much they will be getting and are therefore not able to give us clarity on exactly what their budget is likely to be.”
Also, some buyers may be constrained by the amount of cash they will receive, as banks are likely to pay a greater proportion of bonuses in shares.
Mortgage brokers are gearing up to offer buyers bespoke solutions, including using share options as collateral for loans.
Paul Welch, managing director of Largemortgage-loans.com, says private banks tend to be willing to structure mortgages based on equity, although these are done on an individual basis and only for the “right sort of client”.
Much of the interest from buyers is coming from people who want to buy a more impressive main residence rather than add another home to their portfolio.
Lindsay Cuthill, head of Savills’ Fulham office, reports that buyers looking to exchange a home worth £2m for one with a £3.5m price tag are “quite typical”. “Another buyer described himself as not being in the ‘big bonus category’ but expects to be able to upgrade from £1.2m to £1.75m,” he says.
Charles McDowell, a buying agent, has already received a number of “serious approaches” from City buyers.
“It would seem that upgrading your own home would be a good way of achieving a capital gain as well as minimising your tax exposure,” he says.
However some buyers may be disappointed.
“The problem will be supply,” says Mr McDowell. “The year has got off to a slow start in terms of new properties coming to the market.”