Prime Central London house prices rise even further

Prime Central London house prices grow at the strongest rate since 1979, with prices climbing 30.5% in the year to January, according to latest results from Knight Frank’s Prime Central London House Price Index.

International demand, the City bonus season and low supply have all helped push London prices higher. Annualised growth stands at 30.5%, with prices growing 8.6% in November, December and January. In January alone prices rose by 3%, the fastest monthly growth rate on record.

Price growth has been led by South West prime London postcodes, an area including Belgravia and Knightsbridge. This is the most international residential market in London. The influx of overseas buyers - European, Russian, Indian and Middle Eastern - has seen this area lead price growth. Prices rose 38.2% for houses and 36.0% for flats in this area in the year to the end of January.

Belgravia and Knightsbridge contain the highest priced property not just in London, but arguably in the world, with £2,500 per sq ft sales prices regularly exceeded over the last 12 months. Demand for properties in South West prime London increased strongly in January with applicant registrations 37% higher compared to the same month a year earlier. Supply on the other hand remained unchanged over the same period.

Liam Bailey, Head of Knight Frank Residential Research, comments: “There has been no let up in price growth in prime central London over the winter period. We are expecting prices to climb a further 12% in 2007 as demand continues to outstrip supply. There is no doubt that the key to the price growth seen in Belgravia and Knightsbridge is international demand. We are seeing a noticeable polarisation in market performance even within central London between those markets influenced by international buyers and those not.”