London property prices up 1.1%

Average property prices in London increased by 1.1 per cent during January, according to the latest research from estate agents Knight Frank.

This is the largest monthly increase since the credit crunch began in September 2007.

As a result annual house price growth now stands at 26.2 per cent – down from a high of 37.9 per cent in August last year.

"While a gradual slow down continues to take its toll on the main housing market, properties in prime central London appear to be proving resilient against the background of continued economic uncertainty," said Liam Bailey, head of residential research, Knight Frank.

"Figures for January show on a monthly basis prices for prime properties in the capital have grown by 1.1 per cent, a slight increase on the previous month and the fourth consecutive month in which there have been signs of modest growth."

Finding from the Halifax House Price Survey, released today, find prices in the country as a whole have dropped one per cent in the last three months.

While prices in the capital have been adversely affected by the effects of the credit crunch, the City is continuing to provide a catalyst for the market, explains Knight Frank.

"As this market depends to a very great extent on the strength of the City it is inevitable that the current unease in the financial sector is influencing its slowdown," continued Mr Bailey.

"However, it is clear that city money is still being invested in prime central London properties, though perhaps not with the same enthusiasm that followed last year’s bonus round."

Knight Frank presently predicts property prices in London will increase by three per cent during 2008. However, a further downturn in the economy could prove to be damaging.

"Should the economic downturn continue we may well see redundancies in the financial services sector," continued Mr Bailey.

"If this were combined with an exodus of foreign non-dom high net-worth individuals anticipating the government’s recently announced tax changes for non-doms then dark clouds may yet gather over London’s prime market," he concluded.