Central London property prices boom 20%

The average price of a residential property appreciated by a staggering 20% in the 12 months to March 2009, according to the latest Knight Frank prime central London property price report.

The index shows that the central London residential property price growth has not been evenly spread, with the strongest growth witnessed in the low to mid end of the market, especially sub-£2.5m, up 23% between March 2009 and the corresponding month in 2010.

Homes in the more expensive price brackets (£5m+) rose at an average rate of 17% during the same period.

The rate of price growth in March, at 0.7%, represents the slowest monthly rate of growth since last April, and suggests that price growth is beginning to slow on the back of higher supply and slightly weaker demand in the market.

Liam Bailey of Knight Frank comments: "The balance between purchasers and vendors, has become more even in recent months. In the final quarter of 2009 our local offices recorded 10 new buyer registrations for every new sales instruction - well above the long run trend of 5.5.

"By March this ratio had dropped back to 7 as more vendors began to bring properties forward for sale on the back of rising prices, and also as buyers began to delay activity in the run up to the budget and the election."

The rapid growth in London property values has been fuelled primarily by low
interest rates and the weak pound - which have driven domestic and international demand - but also to very thin supply over the year, set against very healthy interest from buyers.

Bailey adds: "We can not overlook the importance of international buyers to the market - we reported in the recently released Knight Frank Wealth Report, that a record 49 nationalities bought residential property in central London in 2009.

"Despite the result of our World Cities Survey, that London's position as the leading global city had been ceded to New York, London prime residential market is still underpinned to a considerable degree by international demand - which appears to be rising not declining at the current time."