Euro-buyers are taking advantage of a weak stirling to snap up luxury homes in London’s nicest boroughs, according to Marsh & Parsons, a London estate agent.

European buyers are piling into central London as prices in euros drop. In December 2007, the average completion price for a property in Kensington & Chelsea was approximately £840,000. In sterling terms, Marsh & Parsons said prices have fallen -24% over the past year. But the story looks very different from the continent thanks to the plummeting value of the pound against the euro. In euro terms, prices have plummeted from €1,162,720 to €676,032 – a fall of 42%.

Peter Rollings, managing director of Marsh & Parsons, said, “European buyers - especially Italians - are piling in to London’s property market and supporting prices locally. As far as they’re concerned, there’s never been a better time to buy – they’re snapping up the bargains. While the British economy is faltering, the euro is getting stronger and this is the result. This week we’ve seen two Italian couples competing over a £700,000 property in Battersea.”

The pound has now fallen approximately 15 cents against the euro in three weeks since the Bank of England (BoE) slashed the interest rate to 2% in an attempt to prevent a deep recession. Investors are choosing to shun the pound as the UK interest rate is below that in the Euro-zone and could yet fall to near zero. Short sellers are also betting on sterling continuing to fall.

Rollings said, “ Sterling has plummeted against the euro. One pound is now buying you less than one euro after commission. Six months ago, Europeans were a lot less active in the market. Now half of all the top end sales are going to Europeans thanks to the weak pound.”