The ongoing eurozone crisis as well as turmoil in the global economy have contributed to price growth in London’s luxury property market, according to research by multinational real estate firm Knight Frank.
The research shows that the price of prime properties in central London rose by 0.6% in September 2011 compared to the previous month, hitting an average of £3.97 million per house.
In the last 12 months, prices have grown by 11.4%, representing a price hike of £1,117, per day the study also found.
In a statement published on 26 September, Liam Bailey, head of residential research at Knight Frank, said ongoing uncertainty in the global market, and in the eurozone in particular, has “pushed more buyers into the central London market”, which appears to be a safe place for investments.
This seems to be confirmed by the fact that in the three-month period to September 2011, the number of new buyers went up by 7%, compared to the same period in 2010.
The research also found that international buyers, encouraged by low interest rates and the weak pound, are now responsible for the majority of the property purchases in the central London market - 55% of the total, compared to 49% one year ago.
Not even prices, which have been growing strongly since April 2009 and are now about 5% higher than their last peak in March 2008, seem to dissuade buyers from entering the market.
The number of properties available rose by 13% in the three months to September 2011, according to the report, with this growth absorbing the increase in demand without placing any downward pressure on prices.
As for the future, Noel Flint, head of London residential at Knight Frank, said: “With low interest rates likely to be a feature of the market for the next 6 to 12 months, I anticipate demand continuing at current levels and a supply of new properties still being lower than where we would like them to be.”