This is the fastest rate of growth since mid 1979 and means that prices in central London are now rising at three times the rate seen in the wider UK market.
The most expensive properties have seen the fastest rate of growth, with prices in Belgravia and Knightsbridge rising by in excess of 40 per cent over the 12-month period, with demand supported by growing numbers of overseas buyers and City money. A house worth £100,000 in 1976 would now be worth over £4,100,000
Liam Bailey, head of residential research at Knight Frank 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 totaling nearly 11.9 per cent in the first quarter.
“Even after 18 months of strong price appreciation, the pace of growth has if anything quickened over time. In the six months to April 2007, monthly price growth averaged 2.8 per cent, compared to only 1.7 per cent in the same period to April 2006.
“Prices in central London are now over 33 per cent higher than they were a year ago, and in some locations growth is over 40 per cent (Knightsbridge and Belgravia).
“Houses have again outpaced flats in terms of price performance, reflecting the structural deficit of family accommodation, a national problem which affects London more than any other UK region.”
“Higher transaction costs – particularly Stamp Duty – mean that people are moving less frequently and therefore shortages of stock continue to dominate the market. This is a factor likely to be reinforced with the introduction of Home Information Packs in June. Our data reveals that the supply of available property fell by over 50 per cent in Q1 2007 compared to Q1 2006, while the number of new prospective purchasers increased by 17 per cent.
“So far in 2007 we have again seen that the strongest capital appreciation has been experienced in the inner south-west postcodes, with the prime areas such as Belgravia, South Kensington and Chelsea experiencing significant growth.
“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. 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.
“The most expensive homes have experienced the highest rate of growth recently. In the first quarter of 2007 property priced over £4 million experienced growth of 11.4 per cent, whereas property in the sub £1 million price category experienced more restrained growth, with prices increasing by 6.2 per cent.”
