Prime property prices in central London still growing
04-09-2012
 |
Prime central London property prices rose 0.5% in August, taking annual growth to 9.9%. It means that prices have now risen by 49.9% since the post credit crunch low in March 2009, the figures from the Knight Frank's Prime Central London Sales Index August 2012 report show.
Prices are at a new record high and are 14% above their previous peak in March 2008 while the 1.8% price growth in the three months to August represents the lowest three month growth figure since November 2010. The index also shows that price growth in the year to August was stronger for apartments at 10.9% than for houses at 8.6%.
‘In our July index report we suggested that property prices in prime central London were likely to slow in the coming months. The 0.5% rise in prices in August was not a dramatic departure in market performance,’ said Knight Frank head of residential research Liam Bailey.
‘However, together with the 0.5% rise during July, the rate of annual growth has declined from 12% at the beginning of this year to 9.9% now,’ he added.
He explained that while the rate of price growth may have slowed, a 4.8% uplift over the past six months has occurred despite a number of potential setbacks. ‘The most significant of these was the 40% rise in the top rate of stamp duty in March, with new and still undefined rules for an annual charge on £2 million plus properties held in certain ownership structures and the reform of non-resident capital gains tax rules,’ said Bailey.
‘Moreover, while the Olympics were an undoubted success for London, they had the effect of keeping some prospective buyers away from the market during late July and August,’ he added.
The strongest price growth over the past three months was seen in the £10 million plus price bracket with an increase of 2.9%. The slowest growth, 1.4%, was seen in the £1 million to £2.5 million bracket, which could be explained by uncertainty surrounding the new stamp duty rate.
Among the areas performing particularly well, in terms of prices, is Knightsbridge, which has seen 3.6% growth in the past three months and 15.8% in the past year, the highest rises of all areas covered by the index.
Other significant increases over the past three months were seen in Notting Hill at 3.2% and Belgravia at 2.8%. ‘This has been supported by continued demand from international buyers, notably those from Russia, India, France and Italy buyers,’ said Bailey.
He believes that the critical issue for prime London property over the remainder of this year will be the willingness of international buyers to continue looking to place their equity in this market.
‘How the Euro crisis pans out will be a critical issue. Over the past two years, every time the crisis has threatened to turn to catastrophe the response has been increased demand for London property,’ he explained. ‘Our view at the current time is that, while this demand will be unlikely to translate into rapid price growth over the next few months, it should help to maintain demand and liquidity in the market,’ added Bailey.
