Central London prices hit record levels

The property slowdown in the UK has done nothing to dampen enthusiasm for homes in London's most exclusive neighbourhoods.

Prices in prime central London rose to a record level in June, surpassing the previous peak in the days of irrational exuberance, the spring of 2008, according to the Knight Frank Prime Central London Index. Prices increased 0.9 per cent in June, an 8.3 per cent uptick from a year earlier and 34 per cent higher than March, 2009.

International sales continue to fuel the market, accounting for more than 50 per cent of sales in properties priced above 1 million pounds.

The surge in values should slow in the second half of the year, as more supply comes on the market, Knight Frank said.
 
"If demand has risen marginally, supply has risen more rapidly, much to the relief of buyers who have faced thin choice in the market for the last 18 months," Knight Frank's Liam Bailey said.

But Knight Frank has decided to toss aside its original prediction for central London prices, based on the first half surge. Instead of a 3 per cent increase for the year, the consultancy now forecasts a 9 per cent jump in values.

Last week rival agency Savills, which originally predicted prime London prices would drop this year, also revised its forecast. Savills now says prices in the central neighbourhoods will ultimately rise 8 per cent this year.