Prime London property prices expected to rise in 2012


Wednesday 26th October 2011

Property prices in prime central London are expected to continue rising next year, according to the latest forecast from estate agent Knight Frank.

Knight Frank projects that prime central London prices will increase by an average of 5% in 2012. The property consultancy expects to see longer term price appreciation of 24%, on average, by the end of 2016.

Liam Bailey, Knight Frank's head of research, said: "Prices in prime central London are currently at an all-time high, despite which we believe there is scope for further price gains over the next 12 months, averaging 5% across 2012."

Bailey added: "The reasons which have underpinned recent growth - a weak pound, renewed wealth-creation in emerging markets, the search for safe-haven assets and flight capital - all seem set to continue, at least in the short term, reinforcing our positive view for next year."

With residential property prices set for greater capital growth, new home developers are generally confident about the outlook for the market in 2012 and do not foresee an adverse impact from the sovereign debt crises, according to Jones Lang LaSalle (JLL).

JLL's latest survey found that 84% of new home developers thought that central London apartment prices in core locations would increase next year. In fact more than a quarter of respondents thought that prices would increase by over 5% in 2012. A further 37% thought that prices would move up by between 2 and 5%. Only 5% expected prices to depreciate in 2012.

Neil Chegwidden, residential research director at Jones Lang LaSalle, who undertook the research, said: "Our survey confirms that developers remain positive and confident about the outlook for the central London residential market despite the overhang of gloomy economic and financial market news.

"The vast majority believe that prices will increase next year with more than a quarter of developers confident that prices will rise by more than 5%. Strong appetite from overseas buyers is clearly key. Our research suggests that more than 75% of recent new apartment sales derive from overseas. The international dimension has also led to core central London locations outperforming the rest of the UK market and we expect this to continue next year."