Prime central London property prices rose by 7.9 per cent in 2011, recording a 1.1 per cent increase in the last three months of this year, data from London-based Cluttons shows.
The property consultant said in its London View: Winter 2011 report that prices are now 2.48 per cent below the market peak in the third quarter of 2007. At the end of this year, average propery prices in central London will be £1.72m.
Cluttons claimed this growth is in line with its end of year forecast of 8 per cent. Of the London regions, the central south west and central north west London witnessed the highest growth in the capital, recording average prices rise of 2.5 per cent and 1.5 per cent respectively.
However, while supply levels across prime central London are significantly down, leading to a drop in registrations, Cluttons claims that anecdotal evidence suggests that real demand levels are significantly higher as potential buyers only rush to register once they see a suitable property come to market.
James Hyman, partner for residential sales at Cluttons, claimed that the incentive to buy in central London “remains strong” with homes that come to the market in prime areas generating immediate interest and usually selling for “well above listed values” as long as they are correctly priced in the first instance.
He said: “However, loan-to-value ratios and stamp duty thresholds remain a critical deciding factor for mortgage borrowers from the lower end of the market at around £500,000 up to the £2m price brackets.
”December is proving to be strong month with buyers willing to tie up deals by the end of this year in anticipation of further price growth in Prime Central London in the first quarter of 2012.”
Cluttons’ London View also showed a contraction in prime central London rental value of 0.4 per cent for the first time since Q4 2009. Cluttons believes that tenants are now more price sensitive and landlords are showing greater flexibility in rent negotiations, preferring to reduce the possibility of void periods against rental uplifts.