The latest index from Knight Frank shows that the price of prime residential properties continued their upward trend with a 2.1% increase in October.
In key locations such as Chelsea, Kensington and Notting Hill prices have now risen by nearly 6% in the last six months for properties prices at £2 million and above.
But overall average prices are still 16% below their market peak in March 2008 although the annual rate of price change has improved to -3.2% from -8.8% in September.
‘The central London housing market has experienced an extraordinary period in recent weeks.
A shortage of property for sale, a weak pound which has encouraged overseas buyers and the return of bonuses to the City all contributed to pushing prices up in October at the fastest monthly rate of increase since July 2007,’ said Liam Bailey, head of residential research, Knight Frank.
Indeed it is the return of City bonus payments that is keeping prices high even although foreign buyers are still strong.
‘The undoubted driver of strong price growth in recent months has been the return of the UK buyer, in particular those employed in the City,’ said Bailey.
The report reveals that UK buyers made up 67% of all property purchases in the £5 million plus sector in the three months to the end of October, compared with only 43% in the preceding three months.
The market rise has been led by Chelsea, Kensington and Notting Hill where prices have risen by almost £1,340 a day in the last six months.
The strongest performing price bracket continues to be the £1 million to £2.5 million sector which has risen 5.3% in three months.
Even the top price bracket of £10 million plus has begun to see some life with a 1.9% rise in price in October.
While there was anecdotal evidence of rising stock volumes in September this failed to continue into October, the report shows.
The number of new properties being brought forward for sale in October was almost 60% below the level seen in October 2008 and 58% lower than September this year.
Interest remains strong.
In the last month, Knight Frank has handled four £10 million plus sales to UK, Russian and Chinese buyers, three in Belgravia with asking prices of £16.25 million, £17 million and £32 million and one in Knightsbridge with an asking price of £11.5 million.
And in much sought after locations prices have been astoundingly strong.
For example, in Kensington, prices for individual properties in Academy Gardens have risen 25% since 2007.
A two bedroom flat recently achieved £1,832 per square foot having previously sold in June 2007 for £1,400 per square foot.
