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London prices at 28 year high

Prices in prime central London are growing at their fastest rate for 28 years, according to the Knight Frank Prime Central London House Price Index. Huge levels of demand and continued low supply levels are driving prices higher each month, with annualised growth now standing at 31%. Knight Frank expects this trend to continue, admitting its forecast of 12% growth in prime central London in 2007 could even be an underestimate.

The strongest capital appreciation has been experienced in the SW postcodes, with Belgravia, South Kensington and Chelsea experiencing significant demand. Unlike some property experts, Knight Frank does not believe the strong start to the 2007 London property market is simply a reflection of large bonus handout. International buyers, according to Knight Frank, are driving the market as much as city workers. ‘International demand is the key to this substantial price growth,’ confirmed Liam Bailey, head of research at Knight Frank.

Shortage of stock will continue to dominate the market. ‘With people moving less frequently and the average age of purchasers increasing, shortages of stock will continue to dominate the market ? a factor likely to be reinforced with the introduction of Home Information Packs later in 2007,’ said Mr Bailey.

And having already recorded price growths of 5.6% this year, Knight Frank is expecting the strong market in prime central London to continue. ‘We expect that the next two to three months will see the strong market conditions remaining ? with many potential buyers still waiting for the right property to become available before moving into the market.’

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