London property prices rise for the first time in 12 months

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Amidst continuing dismal property results in the UK, there are some positive price growth figures emerging in select locations, including London.

House prices in prime, centrally located London postcodes rose in April for the first time since March 2008, according to the Knight Frank Prime Central London Index, which went up 0.4%. The news comes as Hometrack, another property data provider, said houses prices in England and Wales fell 0.3%.

Like elsewhere in the US and now Australia, the UK market has been hit by unemployment and decreased lending by the banks. Over the past twelve months, Knight Frank says property values in prime central London have dropped 22.6%, whereas Hometrack's data shows the broader England and Wales market decreased at 10.1%.

Liam Bailey, head of residential research at Knight Frank, warns that while it is good news for the property market to see some positive growth, one good month shouldn't be taken as a sign of anything to come yet.

"Don't read too much into one month's figures," he said. "Nevertheless, house price growth of 0.4% in central London's exclusive postcodes reflects a growing trend towards stronger market conditions which has been developed since the turn of the year."

Bailey said much of the price growth has come in the lower (sub 1m pounds) range, rather than the more expensive properties on offer. Buyers seem to be coming back to the market, as sales volumes have risen by 28% on a year-on-year basis, according to Knight Frank. But that could be held back by fewer sellers, hoping to wait rather than accept a loss.

"Recently we have seen a change of attitude in buyers, wit them losing the fear factor about prices falling considerably further and this has resulted in us agreeing more sales in last six weeks than in the previous six months," says James Pace, head of Knight Frank Chelsea.

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