Central London prices to rise

The price of properties for sale in London is likely to rise substantially throughout 2012, as a lack of supply means that demand will push prices ever higher for those looking to buy.

Earlier this week, it was reported by London property specialist Knight Frank that the price of UK property in London in January had increased once again, by 0.9 per cent when compared to the last month of last year. Property prices in the capital also far outperformed those seen elsewhere in the country for the majority of 2011.

These prices in London were also the highest that the city had seen since July 2011, and has seen the prices increase by 11.9 per cent year on year, when compared to the same month last year.

According to one property expert, this is a trend which is likely to continue throughout the course of the year, mainly thanks to the fact that the number of properties on the market in the capital are fewer than the number of people who are looking to buy themselves properties for sale.

Naomi Heaton, chief executive at London Central Portfolio, said that London is seen as a "magic circle", and the fact that there will be a low number of investors keen to sell this year due to the earning potential, compared to a high number looking to get a piece of the investment pie in London, will mean that there is a high probability of the prices of property increasing.

"Investors who are already holding real estate in prime London central do not see a better place to park their money as they pursue a strategy of wealth preservation with potential upside and avoid the more speculative equity markets.

"They will therefore hang on to their real estate holdings. Meanwhile, investors outside the magic circle will be seeking to get in, increasing demand and an upward pressure on prices."