Hold onto your hats, the London property market roller-coaster is trundling skywards again.
Prices for prime central London homes rose by 20% in the 12 months to the end of March 2010, according to Knight Frank’s Prime Central London Residential Index.
That means that prices are now rising at their fastest rate since March 2008 (when the market peaked) and are now only 9% lower than two years ago when prices fell off a cliff. At 23% growth, the action is being led by the ‘lower to mid end’ of the central London market (ie, homes costing less than £2.5 million).
Liam Bailey, head of residential research at Knight Frank, said: “The central London market has enjoyed boom-like conditions in recent months, at least in terms of prices, which rose by 20% in the 12 months to the end of March 2010. This growth has not been evenly spread, and it has been the low to mid end of the market, especially sub-£2.5m, which has seen the strongest growth (23%).”
The more expensive price brackets have lagged (eg, 17% for the £5m+ sector), reflecting the later price recovery in this part of the market.
However, it could be that the rate of price growth is already slowing – last month’s 0.7% increase represents the slowest monthly rate of growth since April 2009. It suggests that price growth is slowing due to a higher supply but weaker demand in the market – partly caused by buyers postponing their purchases until after the election.
Liam Bailey argues that the rapid growth in London’s pricing reflects not only the stimulus given to the market from low interest rates and the weak pound (key drivers of domestic and international demand) but also to very thin supply over the last 12 months, set against ‘healthy’ interest from buyers.
A record 49 nationalities bought residential property in central London in 2009, demonstrating that the London prime residential market is still underpinned to a considerable degree by international demand.
Stewart McIntosh
