Record growth in prime central London has led to prices in Chelsea growing by 19.5% since the beginning of the year. The annualised price growth in prime central London now stands at its highest rate since October 2000. ?We expected the London boom to continue into May ? and the market has not disappointed us,? says Liam Bailey, Knight Frank?s Head of Residential Research, ?There have been 17 consecutive months of price growth in central London ? with the last monthly price fall recorded in December 2004.?
The £1 million – £2 million price mark has taken over as the capital?s best performing sector. ?We have seen two clear trends in the market since the start of the year ? firstly ?uber-prime? areas have led the market and secondly the massive rise in price experienced at the very top of the market has now eased and growth is now driven by the £1 million to £2 million price bracket,? says Mr Bailey.
According to Knight Frank, the growth of the ?uber-prime? market is the result of buyers wanting to live in central London. An average priced flat in the SW3 postcode (£571,123) has risen in value by £4,659 every week since January.
But the property firm believes that now the focus has turned to the £1 million to £2 million price bracket, the London boom could be starting to lose steam. ?Just as London trends lead the UK housing market, trends in prime central London lead the wider London market. The prime areas of London are one of the first lead indicators of a housing market downturn or upturn in the UK,? explains Mr Bailey.
Knight Frank first suspected the prime London market boom in April last year when properties in the top London price brackets detached themselves from the rest of the market. ?Properties priced at over £4 million suddenly saw a huge surge in value which continued until February this year when the rate of price growth in this bracket slowed noticeably,? says Mr Bailey, ?It has been the lower price bands in prime London (£1 million to £2 million) which have seen the real growth and have led the market in recent months.?
The change of dynamics in the prime London market could pre-empt a slower period for the wider market as it enters the summer months, says Knight Frank.