Prime Central London property prices set for further growth in 2013

Property prices in prime central London increased again in July, up by 0.5% month on month and so far in 2013, prices for the very best homes in London have increased by 4.2%.

And over the last 12 months prices have grown by 7%, according to the latest prime central London index from property firm Knight Frank.

The strongest price growth has been in the sub £1 million market and the biggest rises in June were in Islington and Marylebone where prices increased by 1.1% and the South Bank where they increased by 1.5%.

‘In spite of new record prices, interest among prospective buyers remains high. Property viewings in prime central London over the year to date are up by 15% compared to the same period in 2012 and the number of new applicants is up by a similar level. Rising demand has translated into higher sales volumes, up by 8.2% year on year,’ said global head of residential research Liam Bailey.

‘Last year, we forecast that prices would remain unchanged in 2013, marking an end to the strong run the market has seen since early 2009. Our rationale was that the increase in Stamp Duty would have an impact on the top end of the market and there would be resistance to price growth from domestic and international purchasers,’ he explained.

‘In the event we overstated the negative impact of the 5% to 7% Stamp Duty rise for £2 million plus properties. The further weakening in sterling in the first half of the year helped to boost overseas interest and domestic demand has been aided by London’s economic recovery and arguably from the government’s Help to Buy scheme, which was launched at the end of the first quarter of this year. We have therefore raised our forecast for prime central London price growth for 2013 to 6%,’ he added.

The report also shows that there remain differences in performance between locations and price bands across prime central London. In July, property in the sub £1 million bracket increased in value by 1%, while homes in the £1 million to £2.5 million price bracket climbed 0.6%. Comparatively, the price of super prime homes in the £10 million plus sector remained unchanged over the course of the month.