How a £1m investment made £407 a day, every day, for three years

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Prime central London property prices reached a new high in June, but with values almost 50% higher than they were in March 2009, the rate of price growth is beginning to slow. Liam Bailey, Head of Residential Research at Knight Frank examines the latest data.

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Our index confirms that £1m invested in central London property in March 2009 would now be worth approximately £1.48m. This growth equates to an average monthly appreciation of £12,400, or £407 daily.

Prime central London property prices reached a new high in June, but with values almost 50% higher than they were in March 2009, the rate of price growth is beginning to slow. Liam Bailey, Head of Residential Research at Knight Frank examines the latest data.

Prime Central London Index – June 2012 results

  •     Prime central London property prices rose 0.8% in June 2012, contributing to annual growth of 10.5%
  •     Prices have now risen 48.4% since their post-credit-crunch low in March 2009
  •     Prices continue to post new record highs, and are now 13% above their previous peak of March 2008
  •     Over the past three months price growth has been more robust in the lower price bands, sub-£1m (3.3%) and £1m-£2.5m (3.2%)

Prime central London property prices reached a new high in June, but with values almost 50% higher than they were in March 2009, the rate of price growth is beginning to slow. Liam Bailey examines the latest data.

“Over the past three years, the central London market has stood apart from the wider UK market, with surging prices and demand growth.

“Our index confirms that £1m invested in central London property in March 2009 would now be worth approximately £1.48m. This growth equates to an average monthly appreciation of £12,400, or £407 daily.

“The above calculation assumes the original purchase was made in sterling. With over 50% of prime central London purchases being made by overseas buyers, the impact of currency exchange rates is a relevant factor for investors. The headline of 48% price growth since March 2009 would, in effect, have been 70.3%, 62% and 62.1% respectively for a buyer converting funds from Euros, US dollars or Hong Kong dollars, as sterling strengthened over the intervening period.

“Some market observers have questioned whether this strong price growth will continue. Over the past few years international buyers have seen London property as a safe-haven investment in an increasingly volatile global economy.

“Evidence of this is the fact that while European (non-UK) buyers averaged 10% of the £2m+ central London market between 2005 and 2010, the same figure for 2011 and 2012 to date is 20%. Greek buyers led the charge last year and 2012 has so far been led by Italian and French interest, with a growing number of Spanish and even German buyers.

“While the safe-haven factor continues to support the market, we are beginning to see resistance from buyers to on going price increases and the difference between asking and achieved prices are beginning to widen (the percentage of the asking price achieved fell from 96% in March to 92% in June).

“In October last year we forecast 5% growth in prices for the whole of 2012. With 5.5% growth already, we do not expect to see a significant additional uplift during the remainder of 2012.”

For further information, please contact:

Liam Bailey, head of Residential Research, Knight Frank, +44 (0)7919 303 148, liam(dot)bailey(at)knightfrank(dot)com

Daisy Ziegler, London PR manager, Knight Frank, +44 (0)20 7861 1031, daisy(dot)ziegler(at)knightfrank(dot)com

Notes to Editors

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 242 offices, in 43 countries, across six continents. More than 7,067 professionals handle in excess of US$817 billion (£498 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit http://www.knightfrank.com.

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