Prices have risen 43% from their post Lehman collapse low point in March 2009, and are 8.9% higher than their previous peak in March 2008. Volume of sales has risen 85% in the year to February.
The index also reveals that Italians have accounted for 8% of purchases since January, beating Russians to the top spot.
The sustainability of central London's property market has been questioned continually since the current revival began in 2009. But rising sales volumes should provide some comfort according to Liam Bailey, Knight Frank's head of residential research.
‘This has been a very strong upturn. Prices are now 8.9% above their previous peak of March 2008 and have risen at a rate almost double that seen in previous upturns,’ he said.
A weak pound, plus capital flight, plus rising global wealth, minus thin supply, equals rampant price inflation, according to Bailey. ‘A careful examination of transactional market data confirms that the process seems set to deliver further growth, at least in the short term,’ he added.
The most telling sign of this shift in investor attitude came in January and February when Italian purchasers became the biggest foreign purchaser group, accounting for 8% of all purchases, replacing Russians who have held this position for several years.
New applicant registrations overall have risen by 15% in the past year, while the £5 million plus segment has seen a rise of 26%. Supply is also higher, although not keeping pace with demand. It is up by 10% over the same period. The £5 million plus sector supply is beginning to run ahead of demand, up by 34% over the past year.
‘The most positive indicator is sales volumes. Even after an additional 11% rise in prices over the past year, strong purchaser demand has led to sales volumes, sold subject to contract, being higher by 85% over the year. This is feeding through to exchanges, which are up by 43% year on year,’ explained Bailey.
‘We forecast last October that prime central London prices would rise by 5% in 2012. At the current time the evidence from the market appears to underpin this view,’ he added.
