London house prices are reporting the strongest annual growth rate since June 2002 says Knight Frank. Its latest Prime Central London Residential Index shows that in February, house prices grew by 2.2%, smashing January?s record. According to the Index, property sales in prime London in January and February are 30.1% higher than a year ago and viewing levels have almost doubled.

The strongest capital appreciation, according to Knight Frank, has been experienced in South West central London postcodes, mainly areas such as Belgravia, South Kensington and Chelsea. Knight Frank?s Head of Residential Research, Liam Bailey, said: ?Momentum is gathering in the prime London market as growth rates continue to rise in 2006. Although there is high level of foreign purchasers, the bonus season and general confidence in residential market has brought back UK based purchasers to the market.?

Knight Frank?s Index is compiled by revaluing properties located in postcodes W1, SW1, SW3 NW1, SW10, W8 and W14 with an average value of over £1.5m (flats) and £3m (houses) on a monthly basis. This assessment provides an accurate picture of pricing trends in the prime central London sales market.

Mr Bailey predicts that shortages of stock will continue to dominate the market, due to people moving less frequently and the introduction of Home Information Packs next year. ?So far in 2006 we have seen that the strongest capital appreciation has been experienced in the SW postcodes with the prime areas such as Belgravia, South Kensington and Chelsea experiencing significant demand,? he confirmed.

City bonuses are not the only reason for increasing demand – Mr Bailey suggests that general demand has increased from all professions. ?Our 7% growth forecast for prices in prime London locations in 2006 is increasingly looking conservative,? he concluded.

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