Prime Central London Properties Reach Record Highs in November, 6% Above Previous 2008 Price Peak

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According to London-based Knight Frank, price growth in the prime central London market continued through November with a further 1% rise, the highest rate of growth since May this year. Price growth over the last 12 months has averaged 12.6%, with the strongest rise,16.1%, recorded in the £2.5m to £5m bracket, and the lowest, sub-12%, recorded in both the sub-£1m and the £10m+ brackets.

This means that a £1m flat purchased in November 2010 will have increased in price by around £395 per day. Those fortunate to have bought a £5m property will have seen price growth equivalent to £2,205 per day.

Average prices for prime central London properties have hit £3.19m, meaning that a typical prime London property has risen in value by more than £1,202 per day over the past year

It is instructive to note that this growth has taken place against the backdrop of ever-worsening global economic news and rising threats of a second credit crunch.

Knight Frank's analysis of market activity in the three-month period to November, compared to the same period in 2010, confirms a positive picture of demand and sales activity, demonstrating that the increasingly apocalyptic news headlines are not having a significant impact on the prime London market.

Sales volumes are running 17% higher than a year ago, although this is driven purely by the sub-£5m market, which is up 20%. Though the £5m+ market has been relatively flat, sales 'subject to contract' are up 28% year-on-year in this bracket.

On the demand side, new applicant registrations are up 12% over the year (6% for the sub-£5m market and 40% for the £5m+ market). This positive reading is more than matched by supply, where new instructions to sell are higher by 15% (10% sub-£5m and 44% over £5m).

Though stock levels are rising, the ratio of new applicant registrations to new instructions has slipped only very slightly, from 4.2 in late 2010 to 4.1 in November this year.

Despite growing global economic instability, Knight Frank forecasts positive price growth in 2012, but at a slower pace than they have seen over the past two years. Knight Frank is expecting a rise of 5% across the whole of next year.