Central London home prices up 3.2%

The average price of a home in Central London appreciated by 3.2% in February 2010, the highest monthly rise since August 2007, according to research conducted by Knight Frank.

Central London home prices are now just 10% below the market peak of March 2008 having increased by a staggering 19% in the past ten months.

Liam Bailey, head of residential research, Knight Frank, commented: “The market recovery in London was kick-started in March 2009 by low interest rates and the weak pound which drew foreign buyers to the capital. There was a definite feeling that price falls in the year to March 2009, at -24%, had created good value in London and buyers began to bid prices higher. Foreign demand has led the market, with 45% of £2m+ purchases going to non-UK buyers over the past 12 months.

“The continuation of the growth in prices and the recent increase in the speed of such growth has been caused by a dramatic shortage of supply, with 22% fewer properties available for sale at the current time compared to normal for the time of year. At the same time demand has remained very strong with a significant influx of foreign purchasers meaning that purchaser applicant registrations are 30% higher right now than in any comparable period for the last five years.”

An increase in demand has attracted the interests of new home developers, some of which have returned to build new homes in places locations like Chelsea, Mayfair and Belgravia, after an absence of almost 18 months.

There was a 43% rise in new home construction starts in Kensington & Chelsea between July and December 2009, from 557 to 799 new build homes.