Prime central London property prices have been on the rise for the last four years, according to new research. In its Spring 2013 London Residential Review, Knight Frank revealed that the performance of the capital is markedly different with the rest of the country.
For example, prices for homes in prime central London have increased by a sizeable 53 per cent since March 2009. Additionally, and here is where the buoyancy of the market can really be gauged, prices today are 16.5 per cent higher than the previous market peak in March 2008 (pre-financial crisis).
There has, nevertheless, been a decrease in house price growth in central London compared to last year, even in the face of such high demand for property in this area. One reason for this, speculates Knight Frank, is due to the sector having to "absorb" a 40 per cent rise in the top rate of stamp duty.
"London's relatively healthy rate of price growth compares with a somewhat anaemic -1.4 per cent for New York, -4 per cent for Paris and -6 per cent for Geneva," commented Liam Bailey, global head of residential research at Knight Frank. "Over the last two years the proportion of £1 million plus sales in London to non-UK buyers was 51 per cent, rising to 60 per cent for properties priced above £5 million."
The expert added that overseas buyers are vital in the new-build market and that the company's map of local London markets has confirmed that high net worth individuals from all over the world are "still drawn to London" over other major cities.
As for the rental market, 2012 has been, for the most part, a very difficult year, with rent declining in ten of the 12 months. Go back to 2011, which was notable for a period of healthy growth, and this is a dramatic difference. " The sector remains closely tied to city employment and until we see a recovery here it is unlikely that any significant turnaround in fortunes will be seen," Knight Frank stated.