London top priced property continued to recover, rising by 1.4% in the final quarter of 2003, but failed to recover fully from falls in the first half of the year, finishing the year 1.9% down on an annual basis.

However, says Knight Frank property specialists, the price falls in the first half of 2003 of 6.6% have sharply reversed, and house prices in the capital look set to continue to recover through 2004

Flat prices, being mainly penthouses and luxury apartments, were up 2.4% in the final quarter, and have fully regained ground against the price falls in the early part of last year, up 0.6% overall in 2003. Prices of houses rose 1.0% in the last quarter but remained –3.0% down over the year.

Over the year, property prices at the very top end of the luxury market (ie: above £3 million) have seen the largest falls, of -3.5%.

Americans make a tentative comeback

One third of the buyers in the Central London prime property market are foreign nationals. In the second half of 2003, 13% of purchasers were European, particularly Russians.

The Americans have been making a tentative return to buying, with their purchasing activity rising from 1% in the first half of 2003 to 6% in the second half. Prior to September 11th North American buyers typically accounted for 8 to 10% of prime property purchases in London. Middle Eastern buyers also rose from 2% in the first half to 6% in the second.

Over 70% of vendors were UK citizens in the second half of 2003, up from 64% in the first half. American sellers, accounting for 7.4% in the second half, were down from 11.5% in the first half.

Fiona Sadek, head of research at Knight Frank, comments:

“The prime property market in London is staging a marked recovery following a prolonged period of stagnation that followed the September 11th terrorist attacks and which lasted all the way up to the end of the Iraqi War last year.”

“Over the last six months renewed buying confidence, especially from foreign investors, has helped improve sale prices achieved. We expect this positive trend to continue this year.”