Could shine be starting to come off London market?

Prime central London prices have hit new record levels, rising nearly 40% since March 2009, Knight Frank has reported.

The firm says that prices are now 12.5% higher in central London than a year ago, and are 5.2% higher than their previous record achieved in March 2008.

However, there are mixed signs that the shine could be starting to come off the market, with the number of new sales instructions down 6% over the last year, the number of new applicants down by 11% and viewings down by 8%.

While the number of exchanges is lower than a year ago, sales agreed,however, are up 12%.

Liam Bailey, head of residential research, said: “Despite this strong showing from sales volumes, and ongoing positive movements in pricing, there are some indicators pointing to more subdued conditions in the market.  

“There does seem to be a noticeable trend towards a more cautious approach from buyers.
 
“Our forecast for the prime central London market in 2012 is for positive price growth, but at a slower pace than we have seen over the past two years – we are expecting a rise of 5% across the whole of next year, compared to strong double-digit growth this year.”

He added: “Looking ahead there is a strong likelihood that geo-political issues will continue to push overseas buyers into London, especially at the top end of the market.

“The forthcoming Russian election in 2012 has already spurred increased activity from Russian buyers, and the ramifications of the Arab spring are still not fully played out – buyers from this region are still looking to invest in London.”