The price of prime central London properties has increased sharply during 2011, according to a report.
Property prices in the heart of the capital went up by 1.1 per cent in the final three months of the year, Cluttons’ London View: Winter 2011 report found. Prices have increased by 7.9 per cent over the course of the year.
The property consultant said prices are now just 2.5 per cent below those seen when the market reached its peak in the third quarter of 2007. Average property prices in central London are forecast to be £1.72m by the end of the year. This growth is in line with the growth of almost eight per cent it forecasted for the year.
Of the areas to perform best in the last quarter, central north-west London experienced growth of 1.5 per cent over the last three months, while central south-west London saw property prices go up by 2.5 per cent.
The report states that demand levels for property are running at significantly high levels, with buyers rushing to register interest in a property once a suitable one is listed. However, this has led to supply levels falling in central London.
Cluttons partner for residential sales James Hyman: “The incentive to buy in central London remains strong with homes that come to the market in prime areas generating immediate interest and usually selling for well above listed values as long as they are correctly priced in the first instance.
“However, loan-to-value ratios and stamp duty thresholds remain a critical deciding factor for mortgage borrowers from the lower end of the market at around £500,000 up to the £2m price brackets. December is proving to be strong month with buyers willing to tie up deals by the end of this year in anticipation of further price growth in Prime Central London in the first quarter of 2012.”
However, the report also showed a contraction of 0.4 per cent in prime central London rental values, the first decline since the fourth quarter of 2009. The property consultant said tenants are now more price sensitive, while landlords are exercising more flexibility in rent negotiations.