Top residential properties in central London hit new heights

Residential property prices in prime central London increased by 3.1% in June, the highest monthly rate of growth since the start of the Knight Frank Prime Central London Residential index in 1976.

The annualised rate at 34.5% in the 12 months to June is the highest rate since mid 1979.

The market is being led by price growth in the £1-2 million bracket and property priced over £4 million – where price growth is now recorded at above 43%.

Houses have outperformed flats in terms of price growth in each month since January this year.

SW3 and SW10 have replaced SW1 as the centre of the most significant price growth with prices above £1 million growing by more than 40% in the last 12 months.

Liam Bailey, Head of Residential Research, comments: “On the surface, it appears that the prime central London market is steaming ahead with growth of 3.1% in June, however a more detailed analysis reveals that much of this growth is concentrated in the very upper ends of the market.

The Knight Frank Prime Central London Index reveals that properties priced above £4m experienced growth of 43% in the 12 months to June while prime properties priced under £1 million grew by only 1.6%. Over the past three months price growth in the sub £1 million price category has eased possibly reflecting the recent interest rate rise and the sensitivity of this part of the market to general economic trends.

At the other end of the spectrum London’s continuing ability to attract wealthy people from around the world has detached the super-prime market from the wider marketplace. A slow down at the upper end of the prime market in our view will require a significant economic shock affecting both the London and global economy or government intervention in the form of taxation or changes to the status of non-domicile residents.

In the outer prime central London market which includes areas such as Wapping, Hampstead and Wimbledon, property prices have increased by 11.4% in the first six months of the year. This has resulted in annualised price growth of 21.8%. Whilst not as impressive as the results for the prime central London market, these areas have still significantly outperformed the broader London market.

Key market indicators together with the traditional seasonal slow down suggests that price growth in prime central London is likely to slow. In June alone, the number of applicants to the number of properties available has fallen by 5.5%, implying an improvement in relative supply.

We expect to see price growth in prime central London settle at 25% by the year end.”