House prices in London rose by 1.2% during November; prices have now risen by 11.4% since March. They are still 15.2% below their March 2008 peak level.

Price growth has been led by the very top end of the market. £10m+ properties saw growth of 1.9%
during November – the strongest result for all price brackets.

The weakest market was the sub-£1m market which saw only 0.5% growth. The locations seeing the strongest growth are Chelsea, Kensington and Knightsbridge.

Liam Bailey, head of residential research at Knight Frank, says: ‘It is becoming clearer that it is the very top-end of the market that is leading price growth. Anecdotal evidence from across our offices suggests that City money is becoming more apparent as we get closer to the end of year bonus season; and with the upper end of the market benefitting most, it is clear that demand from senior management is driving the market.

‘The change in fortunes of the top-end of the market has been dramatic. Whereas prices in the overall prime central London market stopped falling in March, they only stopped falling in the £10m+ price bracket in May, and even then growth has been anaemic at best in this sector until recently.

‘There has been a definite shift in the performance of the top-end of the market in recent months. Since the wider market started rising in the spring, the main prime London index has risen by 11.4%, but the £10m+ sector has only risen by 6.6%, and most of this has occurred in the last two months (nearly 4%).

According to Knight Frank, there is a clear indication that bonus expectations (£6bn in total this year, up 50% from £4bn last year) are being felt in the market. ‘With stock levels still 25% below trend at the current time – and new buyer registrations up by 30% on last year – the pressure on prices in the short term at least is likely to be upwards.’