The international property firm said that it marks a period of stability not seen since its prime property index was established in 1979.
Annual price growth across all prime London now stands at 4.7%. In the first three months of 2013 values rose 2.2%, a noticeable increase on the 0.8% growth seen in the final quarter of 2012.
‘This said, double digit annual price growth has not been seen in prime London since the heady days of 2009/2010. Since then, we have seen sustained demand for prime London property from both wealthy Londoners and the 34% of buyers who are from overseas. Yet, with stamp duty increases keeping price growth in check, this has not resulted in overheating with noticeably less volatility than in some other prime world markets,’ said Lucian Cook, Savills research director.
The index also shows that prime central London has marginally underperformed the wider prime London markets over the last 12 months, with total growth of just 3%. However prices in the £5 million plus market are still over a third higher than they were prior to the 2008 downturn, having been fuelled by international demand that has accounted for 67% of purchases.
By contrast prices in the prime markets of South West London are 17.6% above their former peak.
‘Over the past 10 years we estimate that over £3 billion of bonuses from the financial and insurances services sector have been pumped into the markets of the boroughs of Hammersmith and Fulham, Wandsworth and Richmond,’ explained Cook.
‘Both the recycling of historic bonus money from the City and the introduction of new bonus money from the West End have contributed to this performance post downturn. Combined with a ripple of demand from central London this has led to annual house price growth of 5.6%, with 3.0% seen in the first quarter of this year alone,’ he added.
Other prime locations popular among young financial sector renters such as St John’s Wood, Islington and Canary Wharf, have seen renewed interest from investment buyers. This has gone beyond the established trend of Asian investment in new build stock, though it has a distinct international component.