Prime central London property registered a 1% growth in December last year, bucking the trends of previous months, according to Knight Frank?s studies.
Annual price inflation is almost identical to the figure recorded by Knight Frank in December 2006. However, the agency warns against reading too much optimism into these figures; if job losses in the City occur the demand for high end properties will fall.
Knight Frank’s Liam Bailey warns: ‘Of those who did receive end of year bonuses many are thought to have done so in then form of stock. As a consequence they may now decide it prudent to wait until market conditions show distinct signs of improvement before venturing once more into the market.
‘It would be unwise to suggest that London’s prime market has weathered the credit crunch on the back of these figures. Indeed most indicators suggest that tightening economic conditions will continue and this may well result in job losses across the city. If this is the case it will inevitably lead to property purchase becoming a discretionary as opposed to investment making process.’
‘Across central London – Knightsbridge, Mayfair, Belgravia and Chelsea – property experienced a return to the growth last seen in September at 1.8%, just before the credit crunch started to bite. One office in the area reported December to be their best month for sales in the entire year with overseas buyers continuing to be the dominant purchasing force. However it is true to say that the lower end of the prime market (between £3m – £7m) remained fairly slow.
‘We are satisfied with our forecast that the prime sector in London will grow at 3% in 2008 in parallel with that for the rest of the property market throughout the UK. However we believe that various parts of the prime market may exhibit little if any growth in 2008. Properties in the super prime sector meanwhile will continue to return the best rates of growth of anywhere between 5 and 10% as overseas investors from countries untouched by the international credit crunch enter the market.’