The UK housing market is either stagnating, falling slowly or growing very slowly depending on which index you pay attention to, with one exception. London. London's normal housing market is the same picture of variation of difference as the rest of the UK, but prime property in London is massively bucking the trend. In fact, Knight Frank has just released fourth quarter data on the sector showing that prime property prices in London have risen more than 40% since their recent post-credit-crunch low in March 2009.
According to the firm demand for prime property in the UK capital is well outstripping supply. This will not be helped by the fact that in the past year new sale instructions fell 6% in Q4 compared to Q4 2010, while new applicants (potential buyers) rose by 10%, according to Knight Frank.
Sales are up as well, with the firm reporting a 43% rise in agreed sales and a 31% rise in exchanges this year compared to last. This all makes the 12.1% growth in prices in the last 12 months alone very unsurprising.
This is not a new trend, in fact prime property prices in London have been growing strongly ever since March 2009. The growth is almost entirely fuelled by foreign buyers, with agencies like Savills, Knight Frank and CBRE all reporting on the dominance of Asian buyers in the sector. What is significant is that price growth in the fourth quarter accelerated, despite the fact that the Eurozone crisis worsened during the period.
However, this is further evidence that international investors see prime London real estate as a safe haven from the global financial turmoil, in which case it is not despite the Euro crisis worsening, but because the crisis worsened that sales and prices increased in the fourth quarter of 2011.