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LONDON: Central London property prices rose 1.1% in January 2011, pushed by tight supply, according to the Knight Frank Prime Central London Index for January 2011.
"London has bucked the wider UK trend in recent months, with strong price growth and resilient demand for property. Whereas prices in the wider UK market fell by over 1% in the year to January, central London saw continued double digit growth," said Liam Bailey, head of residential research at Knight Frank.
Demand for property has been strong with applicant volumes 13% higher in the three months to January compared to the same period a year earlier. The real drivers of this demand have been overseas buyers, especially Europeans, and also City based buyers, who have been more numerous than expected given the uncertain discussions over bonus levels.
"A marker of the strength of the London market is shown by the fact that viewing volumes are up by 30% year-on-year in January," said Bailey in a statement on Wednesday, Feb 9.
On the supply side, Bailey said while stock volumes are running at 3% above the level seen a year ago, they are still down by over 20% compared to January 2009.
"Current rates of sale compared to stock volumes are still running at approximately 10%, far above the long run average of 7% to 8%. This again confirms the position of limited stock in the market for buyers to choose from," he said.
Knight Frank Knightsbridge partner Noel Flint expects the shortage of supply to continue for the short term. "Sellers are still undecided on whether now is the time to sell. The increase in Stamp Duty will add to the cost of moving and past experience shows that as Stamp duty rises so supply falls. International buyers will still play an important part in the prime central London market. London is still seen by many as the No.1 capital in the world in which to live and work. The destabilisation of some Middle Eastern countries and the worries that it may spread further may lead to enquiries for London homes as a safe haven.
"While the international preference is for ready-to-move into homes, the shortage of supply coupled with favourable exchange rates has turned the international purchaser toward off-plan properties with completion dates as much as two years away."
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