The latest data from haart estate agents shows that average London house prices continue to creep upwards after a period of realignment, with prices increasing by 1% in November. The average price of a property in London is now £230,852 up from £228,334 in October.

London house prices have been boosted by high salary levels and a shortage of good quality stock. Also, with record Christmas city bonuses expecting to find their way into bricks and mortar, haart estate agents believes prices are set to continue to rise in the first half of 2006.

Pre–Christmas sales - Sales price as a percentage of asking price

The reduction in asking price to achieve a sale has increased to over 3.6%, said the agents. The slight increase in percentage reductions in asking price to achieve a sale is probably because sellers are keen to secure an offer before the end of the year and are therefore accepting a slightly lower offer.

2006 - Renewed confidence and release of pent up demand

After a period of realignment for the last 12 months the London housing market has started to turn a corner as confidence returns.

Paul Smith, chief executive of haart comments: "Sellers have started to realise that they need to price their property realistically and the market has consequently readjusted."

"However now we are seeing higher levels of activity and house prices creep up, as confidence has started to return and buyers are realising that the market is not going to crash. We expect this positive level of activity to carry over to the first half of the year as 12 month’s worth of pent up activity is released."

"We forecast property prices to rise by 5% in the first half of the year, although we believe that this level of activity is set to cool down and the annual growth is set to be 2-3% over the next year."

Regional analysis

The areas within London with the greatest rise in property prices include South West, West London and South East London with prices rising by 1.7%, 2.8% and 1.5% respectively. Most of the growth in London was seen within and around the City of London and the most prestigious areas of London such as Wandsworth and Chelsea.