Prime central London prices 'set to rise'

Posted: 26 Oct 2011 16:53:57 GMT

The price of property in prime central London is likely to escalate by five per cent in 2012.

Prime central London house prices are expected to climb next year, new research has suggested.

Carried out by Knight Frank, the study revealed an increase of five per cent is due across 2012, before a further four per cent hike in 2014 follows a pause during 2013.

According to the investigation, overseas buyers will continue being attracted to England's capital due to geo-political issues, as the city is viewed as a safe haven for many at the top end of the market.

However, the increases seen in London will go against the trend elsewhere in the UK, with average prices set to drop by around five per cent next year.

The figures showed convincing growth in these regions is not expected to be witnessed until 2014, as the capital remains decoupled from the rest of the UK.

In addition, the results revealed that by 2015 house prices will have dropped by 29 per cent from the peak of the market - and they will not return to the levels seen in 2007 until 2028.

Grianne Gilmore, head of UK residential research at Knight Frank, said the drop in interest rates has delayed a dip in the housing market this year, but the reduction is set to take place in 2013 instead.

The industry figure explained: "Next year, amid a perfect storm of a struggling economy, public sector cuts and rising unemployment, prices will fall. As interest rates start to rise, prices will struggle to maintain any notable growth until 2015."

Liam Bailey, head of research at the group, added recent growth and a weak pound are contributing factors that will see prices in prime central London continue to escalate.

The news follows recent findings from Lloyds TSB, which showed the number of properties being purchased for £1 million or more is at its highest level since 2007.
 

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