London's remarkable summer

Prices in prime central London have risen by a remarkable 6.4% since March, according to the latest research from Knight Frank.

After almost 18 months of appalling market conditions the capital's estate agents can be forgiven a little jubilation.

In the lettings market, the group of 'accidental landlords' has begun to slowly shift properties back into the sales market. It will take some time for the level of rental stock to return to normal levels, however, the decline in rents that we have seen since the middle of last year appears to be ending.

Prices for property in central London rose by 1% in August, the fifth month in a row that prices have risen. The latest price rise means that prices are now 6.4% higher than they were in March, the low point in the recent market cycle.

Price growth has been most pronounced in the key markets for international buyers, such as Chelsea, Kensington and St John's Wood - all locations where prices have risen by 5% in the last three months alone.

It has been the lower end of the market that has led the recent recovery. Prices in the £1m to £2.5m market have risen more than 5% in the last three months, compared with only 2.4% for the £10m+ market.

Once again it has been houses rather than flats that have out-performed - with average three-month price growth up by 4.6% and 3.6%, respectively. Houses have generally seen stronger price performance during both the original boom, last year's downturn and this recent recovery.

However, a note of caution, despite the recent growth, average prices for London's best properties are still 19% below the level they hit in March 2008 - the peak of the prime London market.

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