Prices have been rising strongly since April 2009, and are now almost 4% higher than their previous peak in March 2008.
On the demand side, new buyer volumes were up 11% over this period, with viewings up 23% and the number of offers being made on properties up by 13%.
Liam Bailey, head of residential research at Knight Frank, said: “Stock volumes have risen by 13%, but the rate of sales is keeping pace with this increase, with the number of exchanges rising by 15% year-on-year and the number of properties going under offer rising by 67% over the same period. In summary, prices are higher, as is demand, and supply increases are being absorbed by the market with a sharp rise in year-on-year sales volumes.”
Knight Frank said that despite London’s much touted ‘safe haven’ status taking a knock this month with the rioting, it looks unlikely to dent international buyers’ desire for property in the city.
Its outlook for the prime London market is for price growth to run a little further this year.
Meanwhile, it found that UK rents have hit a record high, increasing by 26.3% since June 2009.
In London, rents rose nearly 7% since January, including a 0.2% rise in August with international tenants from Europe and Asia-Pacific accounting for six out of every 10 lettings in central London.
The number of tenancies which started in the three months to August rose by 13% year-on-year, but the pipeline of tenancies agreed, which is up by 50%, suggests new lending volumes will rise steadily through Q3.
Bailey added: “One of the main drivers of this growth is the fact that international demand for London’s prime properties is even more pronounced in the rental sector than in the sales sector, with almost 60% of tenants coming from overseas.
“While tenants from Asia-Pacific have risen in importance this year, European tenants have grown as a proportion of the overall market, reflective of the demand for accommodation from smaller banks and financial organisations from Europe who have been setting up or expanding operations in London over the past two years.”