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London prices slump

London’s most desirable properties have fallen a further 3.7% in value, the second highest monthly decline on record, according to agents Knight Frank.

Prime central London property prices have fallen 21.4% since their peak in March 2008. Those valued at between £1m and £2.5m have fallen even more in value: 25.3% in the same period.

The super-prime £10m bracket is catching up with price declines after a period of resilience up to last August – losing 20% in value in the five months since September.

Knight Frank have revised its forecast on property prices, saying the peak to trough prices in prime central London are down from 30% – 35%.

However, viewing levels are on the rise with nearly 65% more taking place last month than in January 2008. As has reported previously, demand from foreign purchasers has also risen led by Middle East buyers (52%) and European buyers (38%) – with a particularly strong interest from Italian (43%), French (49%) and Norwegian (51%) buyers.

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According to Knight Frank: ‘The markets seeing greatest growth in viewing and applicant activity are led by the core of Mayfair, Knightsbridge, Belgravia and Chelsea – viewings here are up over 80% on a year on year basis.’

Liam Bailey, head of residential research says: ‘Even when it became apparent that this was not the case, and the majority of the market was in sharp decline, the robust health of the super-prime sector led many to assume that the most expensive streets in the world’s most expensive city would remain unscathed by falling prices.

‘As we reached late summer last year, it became apparent that no part of the market was immune. Every area and type of property was hit by price falls and rapidly diminishing sales volumes.’

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