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House prices on the rise in London boost

CENTRAL London house prices jumped by 3.2 per cent in February – the strongest surge in almost three years, according to figures released yesterday.

Average house prices in central London have risen by almost a fifth in the last 10 months, and are only one per cent below the market peak of March 2008, according to estate agency Knight Frank

Homes costing £5m-plus are fetching at least as much as they before the recession, according to the Prime Central London Retail Index.

Low interest rates and the week pound had lured foreign buyers, the survey found.

Liam Bailey, head of development research at Knight Frank, said: “Price falls in the year to March 2009, at 24 per cent, created good value in London and buyers began to bid prices higher. Foreign demand has led the market, with 45 per cent of £2m-plus purchases going to non-UK buyers over the past 12 months.”

He put the sharp price rises down to a dramatic shortage of homes on the market – 22 per cent fewer than last year. Properties at the top end are particularly in short supply.

Bailey added: “The market recovery in London was kick-started in March last year by low interest rates and the weak pound which drew foreign buyers to the capital.

“At the very top of the market we have begun to see increasing examples of properties hitting or exceeding peak prices again – especially in Mayfair, Kensington, Holland Park and Knightsbridge, where supply of excellent properties is very thin.”

FAST FACTS | HOUSE PRICES

• Average house prices in central London have jumped by almost a fifth in the last 10 months.
• There are 22 per cent fewer properties on the market compared with February last year, according to Knight Frank