“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.”
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