US fuel for London house prices

AN influx of wealthy Americans is boosting property prices in London's most exclusive areas, in the latest sign that the capital's housing market is in the grip of a spring boom.

Following falls through much of last year, properties in the capital's smartest addresses, including Mayfair, Belgravia, Kensington and Chelsea and Regent's Park, commanded price rises of 2.5% in the first quarter of the year against 1.4% in the previous three months, says estate agent Knight Frank.

The best-performing homes were those in the £2m-to-£3m bracket, where increases averaged 4.7%. Prices at the very top end of the market also rose strongly, with £3m-plus properties surging 3.5%, implying average rises of more than £100,000.

Chester Terrace, on the edge of Regent's Park and where the price of a typical home is £3m, saw prices leap 12% in the first quarter.

Other huge gains were seen in Davies Street, Mayfair, nearby Upper Brook Street and Shepherds Close and Ilchester Place on the edge of Holland Park.

Nearly a third of buyers in prime locations were foreign, with Americans accounting for 12% of all purchases against 1% in the first half of last year.

Indian-born billionaire Lakshmi Mittal recently paid out a record £70m for Formula One promoter Bernie Ecclestone's Kensington Palace Gardens mansion.

Liam Bailey, head of residential research at Knight Frank, said: 'Over the past six months, and particularly in the first quarter of this year, foreign investors and a renewed interest from City bankers as a result of higher bonuses have helped push up prices at the top end of the London property market.

'With more significant City bonuses being paid out currently, and with employment prospects improving, buyer confidence is set to continue this year.'

Noel Flint at Knight Frank's Sloane Avenue office said Chester Terrace and Regent's Park had seen strong buying interest.

'Elsewhere, a number of Mayfair streets are performing particularly well, with an increased supply of quality developments, as are houses in the garden squares within Kensington and Chelsea.'

Nationwide building society has forecast house prices across London as a whole will rise by 10% this year while mortgage rival Halifax has put the increase at 8%.