At last - Prime Central London shows house prices growth again

Prices in prime central London grew by 0.3 per cent in the year to May - tiny rise but a significant one according to Knight Frank.

The prime London specialist says it was the first rise in five years and underlines how the recovery of the property market there is not reliant on the re-opening of international travel.

The last time prices increased on an annual basis was in May 2016, the month before the EU referendum. 

Subsequent political uncertainty, combined with a growing number of taxes on high-value property, meant average prices fell 17 per cent in the intervening period.

Tom Bill, head of residential research at the agency, says: “The relaxation of international travel rules will provide a boost for the prime central London property market but prices are on the up anyway.

“Things are picking up where they left off after the general election in December 2019 and buyers can recognise good value after five or six years of falling prices.”

Knight Frank says the eventual relaxing of international travel rules will, however, provide a more noticeable boost in locations such as Mayfair and Knightsbridge.

The other impact of rising prices will be a further erosion of the discount for buyers denominated in overseas currencies. The effect will be exaggerated as the pound gets stronger, which in part has been driven by the country’s vaccine-fuelled economic recovery.

The effective discount based on price and currency movements in PCL compared to the period before the EU referendum for a buyer denominated in US dollars was 19 per cent at the end of May. 

That compares to 24.3 per cent in December last year.

Meanwhile, annual price growth in prime outer London increased to 3.1 per cent in May, which was the strongest rate of growth since before the EU referendum in 2016.