According to the Knight Frank London property index, London’s top priced property has risen to an all-time high, meaning that London now has the most expensive residential properties in the world. The index indicates that the London prime property market is recovering strongly – it rose by 0.3 per cent in April, bringing the capital value increase to 2.8 per cent in the first four months of 2004 and contrasting strongly with the fall of 1.9 per cent in 2003. On an annualised basis, price growth in the first four months of 2004 equates to an increase of 8.6 per cent.
Prices at the very top end of the market are showing the strongest gains, with properties worth £3 million and above rising by 0.6 per cent in April and properties between £2 million and £3 million rising by 0.5 per cent. Overall, London prime property prices rose by 0.3 per cent.
These rising value changes must, however, be seen in the context of higher-than-average falls experienced during 2003.
Liam Bailey, head of residential research at Knight Frank, comments: ‘The London prime property market continues to recover, following a period of weakness in 2003. The shortage of stock remains a feature of the market and underpins recent price growth. It is also self-perpetuating, however, as potential purchasers are wary of putting their own property on the market before they find a new home. Despite the acute shortage of stock, vendors must remain realistic when setting the asking price as only high-quality property attracts premium prices.
‘Whilst price growth nationally is set to slow over the next two years, the trend in the prime central London market is likely to be upward as the City employment market recovers. As buyer confidence continues to increase, our forecast of six per cent price growth for 2004 may be revised upwards when we consider the issue in our London Residential Review in the summer.’
Noel Flint, partner at Knight Frank’s Sloane Avenue office, says: ‘The supply of prime central London houses and apartments is still restricted, which has resulted in many purchasers chasing similar properties. There is an increasing amount of sealed bids and, generally, asking prices are being achieved or exceeded. Prime central London continues to be a top destination for overseas purchasers from around the world, attracted by the cosmopolitan lifestyle, security and the City.’
First-timers buying new
Research by SmartNewHomes.com, the UK’s leading online new homes specialist, has shown that new homes are proving increasingly popular with first time buyers who are taking advantage of price discounts and other incentives to help them get onto the property ladder.
As house prices continued to increase to an average of £165,838 at the end of 2003, the average person is now not buying their first home until the age of 33 and the number of under 25s buying a home has fallen to a low of 10.5 per cent.
The percentage of total sales to first time buyers was an average of 16 per cent in 2003. However according to SmartNewHomes, the percentage of sales of new homes to first time buyers was 29 per cent, indicating that new homes are proving an attractive option for buyers taking their first steps on the property ladder.