Annual price growth exceeds 10% in prime Central London

KEY POINTS:

·      PCL house prices growing at fastest rate since the financial crisis

·      Prices rose by 4% in Q2 alone, taking annual growth to 10.2%

·      Improvements in economy and job prospects have boosted confidence

·      Cluttons believes this rate of growth is unsustainable

Prime Central London house prices are growing at their fastest rate since the financial crisis of 2008, with provisional figures for Q2 2013 showing quarterly growth of 4%, bringing annual growth to 10.2%, reports property consultants Cluttons.

Improved sentiment in the capital in terms of both the economy and job prospects, which are both showing signs of growth, have spurred even more buyers to step into the market or make a long overdue move.

While the supply of properties for sale in London sits at a record low, with Londoners keen to retain their exposure to the capital's market, demand for property has grown with an increase in overall job numbers, which now stands ahead of the economic peak. There has been a particular acceleration in highly skilled and highly paid employment, which is quickly translating into demand for high value homes.

Cluttons does not expect this pace of price growth to continue, however, as it has moved ahead of the long term trend and well ahead of income growth, which is unsustainable.

Sue Foxley, head of research at Cluttons, said: "The current fervent pace of growth will temper over the summer but remain positive in light of the limited supply, tending towards the long term average of around 7% for 2013 as a whole.

"Despite this, first time buyers and those seeking to move up the ladder to accommodate expanding families will face a marked reduction in their buying power in Central London, compared to a year ago. On the up side, those looking to cash in on the record prices in the capital before the summer slowdown are well positioned to make that move."