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Written by rosalind renshaw

Estate agents operating outside the gold-paved streets of London might want to look away now – but Knight Frank is reporting that prices of prime central London property have risen 11.9% since this time a year ago and are now 42% higher than their post-Lehman low in March 2009.

The firm says central London prime house prices rose another 0.9% in January, and it is predicting a further 5% rise this year.

Knight Frank now includes the City and – Rupert finds this still very hard to say –Shoreditch in its definition of ‘prime central London’, traditionally thought of as areas with Mayfair, Knightsbridge, Kensington and Chelsea postcodes. Knight Frank had earlier added the South Bank area to its ‘prime’ definition, surprising those who had never thought of Waterloo, London Bridge and Bermondsey as dream destinations.

Liam Bailey, Knight Frank’s head of residential research, said: “The strength of London’s luxury sector, against a backdrop of economic difficulties both domestically and globally, has surprised many over the past year.

“Ironically, economic and even political turmoil have provided the impetus for growth, with a sharp growth in investors looking for a safe-haven location for at least part of their wealth portfolio.

“The sector-leading price growth at the current time is the £1m-£2.5m segment. Prices in this price range have risen 14.4% over the past 12 months.

“Recent price growth reflects healthy growth in demand, and new applicant volumes are up by 10% over the past year, compared to stock volumes which have risen by only 6%.

“The imbalance in supply and demand is most pronounced in the £5m-plus sector, where applicant registrations are higher by 65% year-on-year.

“Over the past five years the ratio between the number of applicants registering to purchase properties in central London, and the stock of properties to buy, has averaged 3.7. In the last three months, despite a weaker economic environment, the ratio rose to hit 4.1. 

“For the £5m market the ratio shifted from a historic position of 3.4 buyers per property to 6.4 – reflecting the historic undersupply at the upper end of the market.

“Our outlook remains that prices will rise 5% in 2012, driven in large part by international demand and relatively constrained supply.
“Finally, prices for prime property in the City and Fringe, an area we added to our index last year, kept pace with the market in January, rising by an average of 0.8% across the month.”

Separately, Winkworth said that sales in London have been booming since the start of the year, with applicant numbers up and no signs of the level of foreign buyers slowing down. In Knightsbridge, it says that 75% are from mainland Europe, the Arab nations and the Far East. In Notting Hill, 30% are from mainland Europe.


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