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Prime central London property sees mini boom, according to new report

Prices are now rising at their fastest rate since March 2008 and growth is led by the lower to mid end of the market with a quarter of the increase in the sub £2.5 million sector, according to the March 2010 Knight Frank Prime Central London Residential Index.
Prices are now only 9% lower than the March 2008 market peak, the index also shows and analysts expect demand to continue.
But the boom is very much concentrated in one sector with the more expensive price bracket lagging behind, reflecting the fact that the recovery in pricing started later in this part of the market, according to Liam Bailey, head of residential research, Knight Frank.
‘The central London market has enjoyed boom like conditions in recent months, at least in terms of prices. Price growth is beginning to slow on the back of higher supply and slightly weaker demand in the market,’ he explained.
‘The balance between purchasers and vendors has become more even in recent months. In the final quarter of 2009 our local offices recorded 10 new buyer registrations for every new sales instruction, well above the long run trend of five and a half. By March this ratio had dropped back to seven as more vendors began to bring properties forward for sale on the back of rising prices, and also as buyers began to delay activity in the run up to the budget and the election,’ said Bailey.
‘The rapid growth in London’s pricing, reflects not only the stimulus given to the market from low interest rates and the weak pound, which have driven domestic and international demand, but also to very thin supply over the year, set against very healthy interest from buyers,’ he added.
International buyers have also played a part in the recovery. The recent Knight Frank Wealth Report shows that a record 49 nationalities bought residential property in central London in 2009. ‘The London prime residential market is still underpinned to a considerable Degree by international demand which appears to be rising,’ said Bailey.