London continues to lead the way in terms of UK house prices, with a 33 per cent increase in values since March 2009. Prime real estate values in the city climbed once again during May, up 1.4 per cent compared to the previous month, Knight Frank's Prime Central London Index revealed.
Foreign demand remains one of the primary drivers of price growth, with favourable exchange rates ensuring that overseas purchasers are able to benefit from significant discounts on 2007 pre-crash prices.
Liam Bailey, head of Knight Frank Residential Research, said that the price growth shows no sign of slowing down. He added that while prices have now risen by a third, foreign buyers are still buying at a discount when they factor in currency movements.
"Despite a slight strengthening in sterling since early 2009, and the recent strong growth in prices, the typical buyer purchasing a home using Euros will find that prime London property is 16 per cent cheaper than in September 2007. Buyers using US dollars … will benefit from a 17 per cent discount over the same period," he noted.
Currently, Asian buyers account for the majority of sales of new-build properties in the capital, with European buyers at the forefront of the market for existing homes.