UK Property - Prime central London prices, rising at fastest rate for 28 years

Latest results from Knight Franks Prime Central London House Price Index reveal the strongest rate of price growth in 28 years, with prices climbing 31.0% in the year to February.

London prices continue to be pushed by significant demand pressures and continued low supply levels. Demand levels have been underpinned by international demand and a strong bonus season in the City. Annualised growth now stands at 31.0%, with prices growing by 8.4% in the three months to February. In February alone prices rose by 2.6%.

With people moving less frequently and the average age of purchasers increasing, shortages of stock will continue to dominate the market a factor likely to be reinforced with the introduction of Home Information Packs later in 2007. So far in 2007 is that we have again seen that the strongest capital appreciation has been experienced in the SW postcodes with the prime areas such as Belgravia, South Kensington and Chelsea experiencing significant demand.

Many will consider the strong start to the year at the upper end of the property market to be a reflection of strong bonus payments, however, it is our experience that whilst there have been increased purchases by city workers international demand is the key to the substantial price growth in the SW postcodes.

Liam Bailey, Head of Knight Frank Residential Research, comments: -

Our forecast that prices in prime central London will grow by 12% this year could well be an underestimate. Prices have already moved higher by 5.6% in the first two months of the year and we expect that the next two to three months will see the strong market conditions remaining with many potential buyers still waiting for the right property to become available before moving into the market.

Courtesy Knight Frank Residential Research