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Prime Central London Properties Picked Up Steam in August

High-value properties, between £5 million and £10 million, led the market recovery for the sixth consecutive month

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Prime Central London's real estate market showed sign of steady recovery.

mbbirdy/Getty Images
Prime Central London's real estate market showed sign of steady recovery.
mbbirdy/Getty Images

Prime Central London’s real estate market continued to show signs of recovery in August, mainly driven by a strong performance in high-value properties, according to a report Thursday.

Luxury homes, valued between £5 million and £10 million (US$6.5 million to US$13 million), outperformed the general market for the sixth consecutive month. The price index for this segment fell 3.7% from last year, compared to a 5.4% drop in the overall market, according to Knight Frank’s Prime Central London Sales Index for August.

"The Prime Central London market is notably recovering from the three-year downturn," said Tom Bill, an associate at Knight Frank and author of the report.

More:Click to Read More about London Luxury Real Estate

"The primary driver for the market uptick is that vendors are more flexible on asking prices," he said. "Of course, favorable currency exchange also plays a secondary role."

For ultra-luxury £10 million-plus homes, the price index fell 4.8% from a year ago, the slowest pace of price declination since November 2016, according to the report.

Residential properties valued from £1 million to £2 million (US$1.3 million to US$2.6 million) were the worst performers in August, with price index dropping 6.7% annually.

Overall, transaction volumes increased 5% in the first seven months of 2017 compared to the same period in 2016.

Knight Frank didn’t release raw data on sales volume and prices in the report.

On the demand side, Knight Frank saw an 8% rise in the number of new prospective buyers registering between January and August 2017, compared to the same period last year.

More:London’s Proposed Increase in Empty Home Taxes Unlikely to Dampen Luxury Demands

As the Prime Central London sales market gains momentum, rentals show evidence of bottoming out. In August, rental index in the much-coveted area was down 3.4% annually, the slowest decline in more than 12 months, according to Knight Frank’s Prime Central London Lettings Index released the same day.

"The fall in rental values in Prime Central London over the past two years has primarily been due to high levels of stock," Mr. Bill said. And those higher levels of rental properties are the result of slower activity in the sales market following a succession of tax hikes.

"However," Mr. Bill said, "this trend has started to reverse as asking prices adjust and demand improves."