The London residential experts estimate that the £2,000 per square foot average pricing band for developments will spread across the capital city by a kilometre every three years.
‘High demand for luxury property in the capital is pushing the £2,000 per square foot band outwards. There is a limited supply of high end homes in London, and new homes are being snapped up at record rates,’ said Mark Collins, chairman of CBRE Residential.
New developments achieving an average of £2,000 per square foot were traditionally limited to the golden postcodes areas within Westminster and Kensington and Chelsea. However, these areas are now achieving in excess of £4,000 per square foot.
Collins points out that there were less than 550 new units completed last year in Kensington and Chelsea and Westminster, which means buyers who traditionally focused in these prime boroughs are having to expand their search net wider, to the benefit of other areas.
‘Developers have recognised this demand for luxury property and are now building high quality housing in a wider variety of locations. As a result, the prime boundary is gradually moving outwards, and will encompass areas such as the South Bank and the City in the next few years,’ he added.
Meanwhile, prime property prices in central London rose increased by 0.3% in May and are now 58% higher than the market low in March 2009, according to the latest index from Knight Frank.
So far in 2013 prices have now climbed by 3.2% and are 7.2% higher on an annual basis. In spite of rising prices, demand for the very best London homes remains strong, with the number of new applicants 40% higher so far this calendar year compared to the same period in 2012.
‘This rising interest has translated into higher sales volumes across the wider prime London market, with a 17% rise in sales in the first four months of 2013 compared to the same period of 2012,’ said Liam Bailey, the firm’s global head of residential research.
The index shows that there was a 28% rise in sales of homes with a value under £2 million and although the super prime £10 million plus sector saw an initial decline in year on year sales in January and February, this was overturned by a strong 57% annual rise in sales in March and April.
‘It is notable that our index results pointed to modest price falls in Belgravia and Knightsbridge of 0.2% and 0.3% respectively in May, despite strong demand. There is a discernible shift in the market, with anecdotal feedback confirming that buyers are willing to agree to purchases, but only when prices are realistic,’ explained Bailey.
He added that a desire among buyers for lateral living has contributed to higher than average price growth for flats over the past few years and this trend has continued in 2013. ‘The price of a luxury flat in prime central London is 3.5% higher than at the turn of the year. Price growth for houses, while still positive, has been more muted over the same period, rising by 2.6%,’ he pointed out.
International demand remains high. ‘We are seeing a widening of demand for prime London property towards new nationalities. For example searches from Turkey on Knight Frank’s global website for property in London rose by 23% in the first four months of 2013 compared to 2012,’ said Bailey.
Over the past 12 months Knight Frank has sold prime London property to 71 nationalities.
