The latest index from Knight Frank shows that prices for prime central London property rose by 1.2% in November, putting them up 11.4% since March.
But prices are still 15.2% below their peak in March 2008.
The very top end of the market has seen the biggest rise with properties worth £10 million plus seeing growth of 1.9% during November. Chelsea, Kensington and Knightsbridge had the strongest growth.
The weakest was the under £1 million sector which saw growth of just 0.5%.
‘It is becoming clearer that it is the very top end of the market that is leading price growth.
Anecdotal evidence from across our offices suggests that City money is becoming more apparent as we get closer to the end of year bonus season; and with the upper end of the market benefitting most, it is clear that demand from senior management is driving the market,’ said Liam Bailey, head of residential research at Knight Frank.
‘The change in fortunes of the top end of the market has been dramatic.
Whereas prices in the overall prime central London market stopped falling in March, they only stopped falling in the £10 million plus price bracket in May, and even then growth has been anaemic at best in this sector until recently,’ he added.
The index also shows that the rise in prices at the top end of the market has been reflected by significant new activity in the £20 million and £30 million sector.
Deals at this level were taking place on a monthly basis prior to September and since then they have been almost weekly events.
‘Our view is that there is clearly an element of catch up taking place and the £10 million plus sector is following the rise experienced lower down the market over the summer.
There is a clear indication that bonus expectations (£6 billion in total this year, up 50% from £4 billion last year) are being felt in the market,’ Bailey explained.
The trend is expected to continue.
‘With stock levels still 25% below trend at the current time and new buyer registrations up by 30% on last year the pressure on prices in the short term at least is likely to be upwards,’ he added.
