House prices in Central London are at their highest since Tony Blair came to power, according the latest Knight Frank Prime Central London Residential Sales index. Over the last 12 months prices in the capital have gone up by 23.5%, the highest growth rate since June 1997 with a 2.2% price rise in September alone.

Knight Frank attributes the sharp upward price movement to immense demand for prime London properties together with an ever-increasing lack of stock. ‘There is no doubt that this very imbalanced picture between supply and demand has been the main driver of price growth over very recent months and in particular in September,’ commented Liam Bailey, head of Knight Frank Research. The figures show there is approximately 50% less supply on the market this September compared to a year ago.

According to Knight Frank’s survey, which assesses the prices of prime London flats from £1.5 million and houses from £3 million on a monthly basis, the annual summer slowdown only lasted one month this year with August’s 1% growth trumped by 2.2% in September. ‘Buyers came back into the market in serious numbers after the summer break,’ said Mr Bailey, ‘Our records reveal that the number of buyers registered to purchase property in central London is 111% higher than the same period last year. This together with the overwhelming number of applicants was the difference between 0.3% monthly growth experienced in September last year and the strong 2.2% monthly growth this year.”

Postcodes in south west London continued to command the highest prices ? experiencing growth in excess of the 2.2% average figure. ‘This strong growth has contributed to prices of top quality properties in parts of the area being 31% higher than they were a year ago,’ Mr Bailey said.

Further research by Knight Frank has shown that demand for larger prime properties is at an all-time high, with interest from foreign purchasers encouraging a monthly growth rate of 4.2% over the last few months.