Property values in the prime central London market increased by 0.3% in May compared with the previous month and are now 58% higher than the market low in March 2009, according to Knight Frank’s Prime Central London Index.
So far in 2013 prices have now climbed by 3.2% and are 7.2% higher on an annual basis. In spite of rising prices, demand for the very best London homes remains strong, with the number of new applicants 40% higher so far this calendar year compared to the same period in 2012, said Liam Bailey, global head of residential research. ‘This rising interest has translated into higher sales volumes across the wider prime London market, with a 17% rise in sales in the first four months of 2013 compared to the same period of 2012,’ he explained.
This rise was concentrated in the sub £4 million bracket, with a 28% rise in sales of homes with a value under £2 million. The super prime £10 million plus sector saw an initial decline in year on year sales in January and February, overturned by a strong 57% annual rise in sales in March and April.
Bailey pointed out that the strength of the sub £2 million sector does point to indications that buyers are becoming more price sensitive. ‘It is notable that our index results pointed to modest price falls in Belgravia and Knightsbridge of 0.2% and 0.3% respectively in May, despite strong demand. There is a discernible shift in the market, with anecdotal feedback confirming that buyers are willing to agree to purchases, but only when prices are realistic. The biggest price rises during April were in City Fringe at 2.6%, Notting Hill at 1.2% and Kensington at 1%.
Bailey explained that a desire among buyers for lateral living has contributed to higher than average price growth for flats over the past few years and this trend has continued in 2013. The price of a luxury flat in prime central London is 3.5% higher than at the turn of the year. Price growth for houses, while still positive, has been more muted over the same period, rising by 2.6%.
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International demand remains a key factor driving price growth. ‘We are seeing a widening of demand for prime London property towards new nationalities. For example searches from Turkey on Knight Frank’s global website for property in London rose by 23% in the first four months of 2013 compared to 2012,’ said Bailey.
Turkish buyers’ overall market share has risen from 0.6% of all prime central London markets to 1% over the same period. Over the past 12 months Knight Frank has sold prime London property to 71 nationalities. The index is the most comprehensive index covering the prime central London residential marketplace and is based on a repeat valuation methodology that tracks capital values of prime central London residential property.
Prime central London is defined in the index as covering Belgravia, Chelsea, Hyde Park, Islington, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, Regent’s Park, St John’s Wood, the City and the City Fringe. Prime London comprises all areas in prime central London, as well as Canary Wharf, Fulham, Hampstead, Richmond, Wandsworth, Wapping and Wimbledon.