Growth in prime central London was the slowest since June 2006 last month, as prices rose only 0.1% says new research from Knight Frank. Slower monthly growth is feeding through to sharply lower annualised growth rates, with price standing 20.4% higher year-on-year to March, while sales volumes across prime London have fallen by 20% year on year during the first quarter of 2008.
Liam Bailey, Head of Residential Research at Knight Frank said The pattern of slower monthly growth rates seen over the last five months continued into March with our prime central London index recording near even growth of just 0.1%, the same level as November 2007 and the lowest level since January 2005. This slowdown was also reflected in our quarterly figures which show prices of properties in this sector, the traditional flagship for the UK property market, increasing by only 1.8%.
Although our index shows that property in prime central London increased in value by 20.4% in the year to the end of March the overall trend is one of steady decline in growth. The explanation for this pattern of weakening growth is to be found in the continuing pressure being felt in the international money markets; a problem compounded by problems at various financial institutions on both sides of the Atlantic in recent weeks.
However, it also reflects growing fears for job security in the City. This was given added emphasis by a forecast from a recent from the CBI that predicted 10,000 jobs in the financial services industry could be lost in the next three months; a sector that is the historic driver for the prime central London housing market.
However, he emphasised that Knight Frank dont foresee anything like a collapse in the prime central London market, with the proviso that this assessment is based on more normalised conditions in the UK mortgage market over the next quarter.
