Knight Frank Residential Research has announced the September 2006 results of its London Residential Sales Index:
* Central London property prices grew by 23.5% in the 12 months to September 2006 - the highest rate of price growth since June 1997
* The summer slowdown lasted one month, with August's 1% growth replaced by 2.2% growth in September
* Immense demand for prime London properties together with a noticeable lack of stock has been the key driver of sharp upward movement in price growth
* Approximately 50% less supply on the market this September compared to the same month last year
Knight Frank's Head of Residential Research, Liam Bailey, comments: "Prices in central London now stand 23.5% higher than they did only 12 months ago. This is the highest rate of growth in prices since June 1997, when the annualised rate was 25%. Prices jumped for the most expensive homes in the Capital by 2.2% in September alone. We examine the reasons for London's extraordinary performance below - but there is no doubt that this very imbalanced picture between supply and demand has been the main driver of price growth over very recent months and in particular in September."
September was an extraordinary month for the prime London market. Buyers came back into the market in serious numbers after the summer break. Our records reveal that the number of buyers registered to purchase property in central London is 111% higher than the same period last year. The strength of demand is in no way being met by supply. In September, supply had fallen by approximately 50% compared to the same month last year. This together with the overwhelming number of applicants was the difference between 0.3% monthly growth experienced in September last year and the strong 2.2% monthly growth this year. South West postcodes of prime central London continues to perform strongly experiencing growth in excess of the 2.2% average figure. This strong growth has contributed to prices of top quality properties in parts of the area being 31% higher than they were a year ago. Further sub-market analysis reveals that properties in the £4m+ price category experienced monthly growth of 4.2%. Demand for larger houses at this end of the market, particularly from foreign purchasers, has been the driving force behind this strong growth.
