Prime London property market slows

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Knight Frank, the upmarket estate agent, has published its Prime London property index, showing that growth has slowed to a two-year low.

The index recorded an increase of 0.3% in October and according to Liam Bailey, head of residential research, “London has seen a rapid turnaround in market sentiment”.

In the months before this summer’s crisis on the money markets became entrenched, the London house price market was at its strongest for 20 years.

Prices were rising by over 3% per month, reaching 3.9% in July.

As a result, prime London house prices (in the one to two million pound price bracket) rose 34.1% in the year to end-October.

However, owners of such residential property are now experiencing a buyer’s market and houses need to be priced realistically to be sold quickly.

The very top end of the market is still driven by demand from international buyers, with properties worth in excess of £5 million having increased in value by 4.8% in the three months to October.

Knight Frank is forecasting a 3% rise in prime London property prices during 2008, but expects properties worth over £5 million to increase in value by around 8%.

This type of property remains extremely desirable to wealthy residents of the Middle East and countries such as Russia and Kazakhstan.

Mr Bailey sums up the situation as follows: “Vendors of the very best properties will still be able to name their own price, almost, but for the rest of the market price growth will be noticeably lower than that seen in recent months.”


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