London property prices rising fast

The estate agency Knight Frank said that some properties in recent months have fetched 4,000 pounds per square foot - making walk-in wardrobes in parts of Belgravia and Knightsbridge more expensive than three-bedroom houses in Scotland and the north of England.

The report provides further evidence of the twin-track property market, with prices slowing down across the country, except in London, where they continue to soar to astronomical levels.

The monthly report, which specialises in properties worth 5 million pounds on average, shows that these top-end homes have increased in price at 33.3 per cent over the last 12 months.

This is the fastest rate of growth since March 1979 and means that many homeowners in Knightsbridge, Chelsea or Hampstead are earning more than £4,000 a day from their property alone. It is not just City traders spending their bonuses who are fuelling the boom. Russian oligarchs and international tycoons, with bottomless pockets, have started to outbid each other in key locations.

Yolande Barnes, the head of research at Savills, said: "These are big international players, who are after trophy assets. A London property is part of their global portfolio, just as much as Chinese modern art or Indian jewellery."

A house in Belgravia fetched £30m last month, while the most expensive house is reckoned to be worth £100m - a 12-bedroom mansion in Kensington Palace Gardens owned by Lakshmi Mittal, the steel magnate.

However, Knight Frank believes that the market is about to peak, with many buyers becoming increasingly cautious about parting with their cash.

The number of people registering with the agency to buy in areas such as Knightsbridge, has fallen 30% since March. Liam Bailey, the head of residential research at the agency, said: "I think in the next couple of months we will hit the top in terms of price growth. But all the signs are that we are in for another bumper year for City bonuses. So by November there will be another wall of money coming to the market."

A house worth £100,000 in 1976, when the company began its survey, would now be worth £4.2m. Prime properties sell at £2,300 a square foot, easily the most expensive in the world.

In Monaco they are close to £2,190 per square foot. The next most expensive locations - such as New York, Hong Kong and Tokyo - are £1,600 a square foot at most.

Many experts worry about the distorted UK property market, where London and the south of England steams ahead, while parts of Scotland and the North East show only modest growth.

Miss Barnes said: "There is most definitely a north-south divide." The average London property now fetches more than a third of a million pounds, compared to £129,000 in the North East and £138,000 in Scotland.

Source: www.telegraph.co.uk

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