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Growth slows in prime central London property market

Monday, 5 November 2007 12:00 AM

Prices in the prime central London property market increased by just 0.3 per cent during October.

According to information released today by estate agent Knight Frank, average property prices increased by 34.1 per cent in the year to October in the market.

However, while the figures remain positive, growth is slowing in the capital.

Growth of 0.3 per cent is the lowest level recorded since July 2005.

Over the summer London saw an extension of the recent property boom, with prices increasing by an average of three per cent a month.

A record 3.9 per cent growth was recorded in July.

Yet, the credit crunch in August and September distorted the market and bought unsustainable growth to a halt.

"London has seen a rapid turnaround in market sentiment, in early summer we were still in the midst of the strongest market for twenty years, now we are seeing growth fall back rapidly as the market cools," said Liam Bailey, head of residential research at Knight Frank.

"We have seen a sellers market replaced very quickly by a buyers market.

"The new market sentiment means that vendors are having to compete much harder to achieve timely sales and ambitious pricing has effectively ended across the prime and mainstream markets."

The future looks set to witness more, but limited, growth in the market.

"We would note that price growth in London is still marginally positive, and while we expect very low growth to characterise the market over the next few months we believe that demand pressures to mean pricing in London will remain positive through 2008," continued Mr Bailey.

"We have forecast three per cent growth for next year, although we expect prices above £5 million to rise by eight per cent or more during the year - on the back of international demand and particularly demand from oil rich and commodity rich countries (Russia, Kazakhstan, the Middle East in particular)."

Indeed, the most expensive properties have seen prices increase maintain their momentum in recent months.

Properties valued over £5 million saw price increases of 4.8 per cent, while those in the £1 to £2 million bracket saw smaller gains of 2.3 per cent over the three months to October.

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