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LONDON: Prime London property prices have risen by 9.6% over the last 12 months, and are now 35% higher than the post-credit crunch period in March 2009.
In July, the property prices rose by 0.7% on monthly change, taking the increase in the three month period to July up to 1%.
Gráinne Gilmore, head of UK residential research at Knight Frank, explained that the latest results from the Knight Frank Prime Central London Index highlighted the difference between the Central London market and the rest of UK. Although, property owners in central London have seen the value of their homes rise by nearly 10% since July last year, average values in the wider UK market have fallen by over 1% during the same period.
"The strongest sales markets are in Chelsea and Mayfair, where values have risen by 7.7% and 7.2% respectively over the last six months. The Belgravia lettings market is leading the way, with a 1.8% rise in values over the last three months and the highest levels of demand," said Gilmore
As for the rest of the year, Gilmore expressed that the prices of prime properties in the capital will continue to rise, albeit at a modest pace despite the rising level of supply that had gone in some way to addressing pent-up demand.
On the other hand, rent rose by 0.3% on monthly change, and reached 1% higher than their previous peak in March 2008.
"Rental demand continued to rise in July, but stock levels are still constrained in certain areas," said Tim Hyatt, head of residential lettings at Knight Frank, and president of the Association of Residential Letting Agents (ARLA).
"Rents have been boosted by the high levels of activity in the market as many families look to secure newer property before the start of the new school year in September. Like for like deals on this time last year are showing positive growth and we anticipate as ever the summer months being very busy for the London and Home Counties lettings offices," he said.
Meanwhile, Knight Frank head of London residential Noel Flint attributes the main reasons for the level of demand in the prime central London market to the increasing presence of overseas purchasers and low stock levels. Flint explained that in the last month, Knight Frank's offices have seen more interest from continental Europe, possibly due to the ongoing eurozone crisis.
Flint also expects to see a second window in early September with the Middle Eastern buyers
"Middle Eastern buyers have, as always, been key to the market — but with an early Ramadhan, their time spent in London has been shortened. However, we expect to see a second window in early September as they continue their search for a London property while enjoying the cooler climate," said Flint.
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