Luxury London property prices continues to fall, latest index shows

 
Prices of luxury property in central London fell by 0.1% in August, a decline which followed the 0.5% fall in July, according to the Knight Frank Prime Central London Index for August 2010.
 
The recent price falls mean that the annual rate of price growth, which hit 21% in April this year, has softened to 16% in August. The price declines are marginal across all price ranges. However, the biggest drops are being seen in the £1 million to £2.5 million sector.
 
‘There has been widespread speculation for a number of months that the prime London market would begin to turn a corner after a very strong period since last March. Our index results confirm that the market has weakened in terms of prices,’ said Liam Bailey, Knight Frank’s head of residential research.
 
‘To me one of the main reasons for the softening in prices relates to the fact that demand and supply have become more closely aligned in recent months, with supply of stock for sale rising 22% over the past four months and new applicant volumes falling back marginally by 8% over the same period,’ he explained.
 
Another critical issue to the health of the London market is the strength of the overseas marketplace, which has been weakened slightly by Sterling’s rise against the Euro and the US Dollar by 8% and 6% respectively over the last three months, according to Bailey.
 
He points out that the next four weeks will be all important, as the autumn market really begins to gear up. ‘Early signs are promising with a number of vendors beginning to look at asking prices which have become in many instances overinflated,’ said Bailey.
 
‘The London economy is outperforming the UK average by some margin, with strong employment data from Morgan McKinley showing vacancies in the City and Canary Wharf markets up by 71% year on year in July, suggesting that fears of a significant correction in central London values are overdone,’ he added.