The average price of a two-bedroom property in prime London will hit £1 million early next year if prices continue to increase at the current rate.
Two-bedroom properties in prime London grew 14% in value over the past 12 months to today's average of £909,203, according to new research from estate agent Marsh & Parsons.
If this rate of growth continues, the average price will hit £975,843 by the end of this year, and £1,010,974 by 31 March 2014.
In the core area of prime centralLondon – covering Chelsea, Kensington, Notting Hill, Holland Park and Pimlico – the average property price has already passed the £2 million mark.
Two-bedroom property prices in prime London are rising much faster than other types, with a 6% rise in the three months to June, compared to just 3% for four-bedroom properties.
Peter Rollings, chief executive of Marsh & Parsons, said: “Prime London property prices may seem high but the figures don’t tell the whole story. There is of course a huge variation between different areas. Very high value and high demand areas such as Kensington & Chelsea lift up the overall average figures, but there are still many areas of prime London which represent better value for money.
"As a result, we’re seeing many young couples and first-time buyers heading to parts of south and south-west London in search of more space for their money.
“The dramatic price increases we’ve seen in the last year bear witness to the rapidly improved availability of mortgages and wider signs of economic recovery which have helped to clear the bottleneck of those who were waiting for the right time to purchase property.
"But over the coming year, we expect the rate of growth to stabilise in most areas as the prime London property market returns to normal.”
Marsh & Parsons calculated the average price using the mean average value of all the two-bedroom properties in a mix-adjusted, representative basket of properties across the areas of Chelsea, Kensington, Notting Hill, Holland Park, Pimlico, Clapham, Balham, Battersea, Barnes, Pimlico, Little Venice and Brook Green.
An imbalance of supply and demand is contributing to higher prices. During the last quarter, 11% more buyers entered the market in competition for 14% fewer properties. A total of 18 buyers per property were recorded.
The shortage of housing stock on the market has also led to demand for property rippling out from the centre, with prices in less central areas such as Clapham, Balham and Battersea also increasing rapidly.
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