Residential house prices in prime central London locations increased by 1.1% in October despite price falls in the mainstream national markets.
The Knight Frank Index attributes the rise, the highest monthly increase since February 2004, to shortages 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 markets.
The approved plans for expansion of the congestion charge zone to include Kensington, Chelsea and Notting Hill in 2007 are likely to make a positive impact on the residential market in the area. Although any form of taxation is usually frowned upon and will adversely affect businesses, a 90% discount for those living in the area and traffic reduction means the congestion charge could be seen as a bonus for residents.
Although the initial congestion charge was praised for reducing traffic and green house gases in the zone by approximately 30% and 20% respectively, the number of schools in the extended area might restrict the reduction of traffic. Knight Frank says the residential discount and reduced traffic from passers through wont discourage the school run, even with free transport on buses for under-16s.
With growth in prices continuing in prime central London, the annualised growth rate has increased to equal the September 2004 figure of 4.9%. The six monthly figure has picked up slightly to 3.5%, with the three monthly rate doubling since Septembers figure to 1.8%.
Although prime western locations have experienced stable growth since the fall in prices in 2004, given the view on the impact of the congestion charge extension, Knight Frank predicts stronger activity in this market in the coming months.
Noel Flint, partner in Knight Frank, says: “Due to the extra cost implications of living on the fringes of the congestion charge area we believe that there will be an increased demand for property inside the zone. Being inside the congestion charge zone will have added benefits for those who uses their car on a regular basis, especially families with young children.”