Prime central London property prices are growing at their fastest in almost 30 years and at three times the rate of the wider British market, figures show. The value of the best properties in central London has risen by more than 33 percent in the 12 months to end-April, according to estate agent Knight Frank's prime property index.
That is the fastest rate of growth since mid-1979 and means prices in central London are rising at three times the UK average. A property worth just 100,000 pounds in 1976 would now be worth more than 4.1 million pounds, the index shows. Knight Frank said demand had been supported by growing numbers of overseas buyers and money spent on property by City bankers.
Over the past year, Belgravia and Knightsbridge have seen the strongest market, with prices surging by more than 40 percent. Head of residential research Liam Bailey said: "London's traditional spring market rush starts earlier and earlier every year. For the past two years, the season has opened in December rather than March, and has run on well into May.
"The early part of 2007 saw an incredibly active market, with price growth totalling nearly 11.9 percent in the first quarter." He said, even after 18 months of strong price appreciation, the pace of growth was yet to slow and, if anything, had quickened.
In the six months to end-April, monthly price growth averaged 2.8 percent, against 1.7 percent in the same period last year. "The strong performance of the top end of the market can be attributed, at least in part, to the continuing health of the City economy and the bonus season," said Bailey.
"However, it is our experience that, whilst there have been growing numbers of deals completed by City workers, it is the influx of overseas buyers European, Russian, Indian and increasingly Middle Eastern which is the key to the substantial price growth seen in many areas of central London."
Knight Frank data shows that the supply of available property fell by more than 50 percent in the first quarter of 2007, compared to a 17 percent rise last year. Looking forward, Bailey believed stock shortages would continue to buoy the market. Higher transaction costs stamp duty, in particular mean people are moving less often, while the introduction of home information packs (HIPs) this summer is also likely to cause a drop in supply, he said.
The controversial packs designed to making the home-buying process more efficient, cut the number of transactions that fall through and encourage homeowners to reduce energy consumption are due to come into force in England and Wales on 1 June, but have met fierce opposition. HIPs are expected to cost sellers around 500 pounds and estate agents have been reporting a rush to complete deals ahead of their introduction.
The Knight Frank prime central London residential index charts the value of property at the top end of the market: flats and penthouses with an average value of 2.5 million pounds and houses valued at close to 5 million pounds.
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