Prime Central London Market Remains Robust

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London's prime central residential property market is showing no signs of slowing down. 

Average home prices in prime central London increased by 0.7 percent in September compared to the previous month are up 5.5 percent so far in 2013, according to a new report from Knight Frank. 

Prices grew by 1.7 percent in the third quarter of 2013 and have increased for 35 consecutive months, the firm reports. The year-to-date price increase marks a variation in performance between individual markets and price brackets, the report points out.  

Homes in the £5 million to £10 million and £10 million and higher price brackets have increased in value by 3.1 percent and 1.6 percent, respectively, in 2013. Meanwhile, home prices in the sub-£1 million and £1 million to £2 million price bracket are higher by 10 percent and 8.9 percent, respectively.

Even as prices continue to grow in prime central London, the effect on buyer demand is minimal, according to the report. 

"The volume of new buyer registrations rose by 28 percent in the first nine months of the year compared to the same period in 2012," Liam Bailey, global head of residential research, Knight Frank, said in the report. "This increase in buyer interest has translated into higher sales volumes."

So far in 2013, sales in the prime central London market are almost 50 percent higher than the same period of 2012. With sales eating into the inventory, the number of properties for sale in September was 8 percent lower than last year.

The largest monthly price increases for September were in Notting Hill, where prices increased by 1.5 percent from the previous, and City & Fringe, which was up 1.4 percent.

A separate report from Knight Frank showed a 0.1 percent monthly decrease in prime central London rents, which were 1.2 percent lower year-to-date. The volume of signed tenancies increased 16.1 percent in the period January to September 2013, compared to the same period last year.

"The majority of new leases have been for sub-£1,000 per week properties, which have accounted for a significant proportion of all new deals over the year-to-date," Mr. Bailey said.