Prices hold up in prime areas

Despite falls nationally, Knight Frank’s residential house price index registered a 1.1% rise in prime central London locations in October.

Knight Frank puts the rise – the highest monthly increase since February 2004 – down to a shortage of quality stock at the upper end of the market as well as increased City bonuses and salaries.

Its prime central London residential index suggests prime markets are less influenced by subjective price drivers than mainstream ones.

The approved plans to expand the congestion charge zone to include Kensington, Chelsea and Notting Hill in 2007 are likely to have a positive impact on the residential market in those areas. Though any form of taxation will usually adversely affect businesses, a 90% discount for those living in the areas and the prospect of reduced traffic congestion means the charge could be seen as a bonus for residents.

Though the initial congestion charge was praised for cutting traffic and greenhouse gases in the affected zone by around 30% and 20% respectively, the number of schools in the extended area might restrict traffic reduction. Knight Frank says the residential discount and reduced traffic from people passing through won’t discourage the school run, even with free transport on buses for under-16s.

Noel Flint, partner in Knight Frank, says: “Because of the extra cost of living outside the congestion charge area we believe there will be an increased demand for property inside the zone. Being inside the zone will benefit those who use their cars regularly, especially families with children.”