Luxury London pads to add 40pc by 2014

LUXURY house prices in central London will put in a spectacular rally of nearly 40 per cent in the next five years, according to the latest forecast by Knight Frank.<br /><br />The estate agent said prime London properties, worth over &pound;1m, will sidestep a nationwide fall in house prices next year and grow at three per cent.<br /><br />They will then put in a nine per cent gain in 2011, adding to overall growth of 38 per cent by 2014, it said. &ldquo;We believe that the future improvement in market conditions will continue to be led from London and southern England, particularly from the higher price brackets,&rdquo; said Knight Frank&rsquo;s head of residential research Liam Bailey. <br /><br />&ldquo;The economic prospects in central London are brightening more rapidly than elsewhere in the UK.&rdquo; <br /><br />The UK as a whole, however, will put in an overall gain in 2009 of just two per cent before declining by three per cent in 2010 under a &ldquo;W-shaped&rdquo; recovery. <br /><br />&ldquo;A weak economy will feed through to lower household wealth and both the ability and willingness to bid up house prices,&rdquo; Bailey said. <br /><br />But there will be recovery across the UK in the longer-term, he said, with the nation expected to see 19 per cent growth overall over the next five years.<br /><br />He said land prices are set to rise, with farmland prices doubling to &pound;10,000 per acre by 2015.<br /><br />&ldquo;A lack of farmland for sale coupled with strong demand will continue to push up prices,&rdquo; he added.<br /><br />More evidence of a rally in housing prices came yesterday with official government figures saying UK prices rose 2.6 per cent in the quarter to end-August.<br /><br />The figures from the Department for Communities and Local Government (DCLG) said house prices rose by 0.5 per cent in August.