House price growth in prime central London is at its highest since 2001, according to Knight Frank’s latest data. New figures show that annualised growth rate to the end of June stands at a remarkable 17.8%, with prices rising 2% over the course of the month. Summer holidays have sparked a dip in market activity, with transactions taking longer. But according to Knight Frank the slower pace has done nothing to curtail the capital’s soaring prices.
June’s slower sales activity did not come unexpected. Exchanges were down 7% in the second quarter of 2006 compared to the first quarter and properties coming to the market down by 17% over the same period, according to the data. But Knight Frank attributes the slower pace to the holiday period interfering with transactions – figures point to a two week lengthening of transaction periods.
However, despite the slowing sales activity, house prices have continued to grow. ‘Since the beginning of 2006 there has been a common refrain in commentary on the prime London property market – there is a boom taking place and every month the rate of annualised price growth keeps increasing,’ said Liam Bailey, Knight Frank’s Head of Residential Research. ‘Last month we commented that the traditional summer slowdown would take the heat out of the market. Well it has at last – but only in terms of sale volumes, not prices.’
According to Mr Bailey, strong growth in central London has rippled out to area like Hampstead and Canary Wharf, with price growth of 11.1% in those areas and a remarkable 15% in Wimbledon. These growth rates have outpaced Knight Frank’s predictions and have caused them to reassess.
‘We forecast that prices in Prime Central London will stand 18.0% higher at the end of 2006 compared to the start of the year,’ says Mr Bailey, ‘This rate of growth compares favourably to our forecast for the UK and Greater London market where we believe prices will grow by 3.0% and 5.0% respectively.’
Knight Frank is also painting a rosy picture for 2007 and beyond. ‘Our medium term forecast is for prices in the UK to rise by between 2% and 4% per annum and in Prime Central London by between 5% and 7% per annum,’ Mr Bailey added.