A clear differential between top-end properties (£5 million plus) and the rest of the market illustrates the strength of the super prime market with demand from international buyers remaining strong.
After two years of high price growth, the central London residential market has seen price inflation slow rapidly over the past three months, notes new research from agents Knight Frank. The impact of the credit crunch and a weaker City economy has contributed to a more sober market.
Strong growth earlier this year has led to considerable price growth over the past 12 months in central London. Knight Frank’s prime central London index shows prices grew by 34.1% in the year to October 2007. The rate of growth has slowed, with 0.3% growth recorded during October – the slowest monthly growth since July 2005.
Prices for £5 million plus properties rose by 4.8%, however, in the three months to October, while prices for properties in the £1 to 2 million bracket managed only 2.3% – illustrating the divergence between prime and super prime property.
Liam Bailey, head of residential research at Knight Frank, says: ‘London has seen a rapid turnaround in market sentiment. Early this summer we were still in the midst of the strongest market for 20 years; now we are seeing growth fall back rapidly as the market cools. We have seen a sellers’ market replaced very quickly by a buyers’ market. New market sentiment means vendors have to compete harder to achieve timely sales and ambitious pricing has effectively ended across the prime and mainstream markets.
‘We have forecast 3% growth for next year, although we expect property above £5 million to rise by 8% or more during the year on the back of international demand, particularly from oil-rich and commodity-rich countries like Russia, Kazakhstan and the Middle East.’