Record level increase in prices for London homes
Residential property prices in central London have increased 34% since March 2009 and are set to climb further, according to the Knight Frank Prime Central London Index for June 2011.
Prices of prime London property rose 0.9% in June 2011, contributing to annual growth of 8.3%. That means they are now 34% up since their recent post-credit crunch low in March 2009.
The report shows that prices are now at a record high, 2% higher than their previous peak in March 2008 and demand is holding steady as new supply looks set to surge. Knight Frank predicts that prices will continue to grow, albeit at a slower pace in the second half of 2011 and it has revised its forecast for prime central London price growth from 3% to 9% this year.
‘Price growth in the prime central London market continued through June with a further 0.9% rise in prices. Aside from a brief stumble last autumn, prices have been rising strongly since April 2009, and prices are now 2% higher than their previous peak in March 2008,’ said Liam Bailey, head of Knight Frank Residential Research.
‘Looking behind the headline numbers for price growth, activity measures are pointing to continued strong conditions in the central London market over the next few months. While the number of exchanges fell year on year in June by 9%, this was not unexpected, bearing in mind the surge of sales prior to 06 April as buyers tried to complete their sale under the old 4% £1m+ stamp duty rate rather than the new 5% rate,’ he explained.
‘More tellingly there appears to be a new wave of sales coming through, with the volume of properties going under offer (sold subject to contract) rising by 52% year on year in June. On the demand side the number of new buyer registrations has held steady, up slightly by 0.4% this June compared to June 2010, although viewings volumes were up 8% over the same period,’ he added.
Bailey points out that while demand has risen marginally, supply has risen more rapidly, much to the relief of buyers who have faced thin choice in the market for the last 18 months. Stock volumes have risen 12% in the year to June, but there is more in the pipeline with the numbers of new instructions rising 55% in June compared to last June.
‘In the light of ongoing strong conditions in the market, we have revised our 2011 forecast for prime central London prices upwards from 3% growth to 9% over the year. This forecast assumes a slowing in price growth in the second half of the year, driven in part by rising supply and a more competitive environment for vendors,’ said Bailey.