London prime properties rise for the 4th month

August 03, 2009 - London

Prices for prime central London properties rose for the fourth month running in July July with Middle East investors doubling their demand, according to the Knight Frank Prime Central London Index.

Last month's rate of growth at 1.5% means that the annual rate of price change has moderated to -14.4%.

Overseas buyers in the £1m+ market have grown their market share from 35% to 43% over the past 12 months.

The recent market revival has been led by Chelsea and Kensington, where prices have now risen by more than 6% since the low reached in March.

Houses have again outperformed flats, with growth of 1.9% in July meaning that prices are only 18% below the March 2008 peak.

Liam Bailey, head of residential research, Knight Frank, commented: "It has been another strong month for the prime London residential market, with prices up across every sub-market, by area, price band and property type. While the UK market has seen a similar bounce in recent months - the prime markets appear to be leading the market by some margin.

"Rising prices in central London stem from three fundamental issues - returning confidence, resilient demand and plummeting supply.

"One factor underpinning all else is the fact that prices fell very hard and very fast a little more than six months ago. Partially due to the panic engendered by the Lehman's collapse, prices slipped 15% in the five months to January this year. By the early summer property in London was perceived to be offering very good value.

"A key attribute of the central London market has been shown up during the current downturn is the strength of demand. Confidence in the market is witnessed by the growth of applicant demand, up 37% year-on-year in Q2.

"The final element supporting prices has been supply. For some time estate agents have been complaining about a lack of available stock. This issue is now becoming critical to the performance of the central London residential market.

"The volume of properties available in central London in July was down 34% compared to the same month a year earlier. The number of properties coming forward for the autumn market, is showing no improvement - with the pipeline of new properties coming to the market down 42% over the same period.

Source: Business24-7

Photo: Daily Mail / Guardian / David Levene

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