If you’re relocating to London and buying a property there, Knight Frank’s Summer 2010 London Residential Review will be an essential read. It provides a detailed update on the state of the London market, plus analysis of the latest trends and data.

The report highlights the strength of the prime London residential market and the key role overseas buyers are currently playing in it. According to the report's findings, the latter now account for over 50% of all prime London residential purchases; in the £5m+ sector, they account for over 68% of all buyers. In Mayfair, Knightsbridge and Hampstead, overseas buyers account for more than 60% of all prime market purchases.

The number of different nationalities buying in central London has grown from 30 in mid 2008, to 48 in mid 2009, to 51 by mid 2010. International demand has helped to drive prices higher by 24% in the 15 months since March 2009; prices are now only 6% below their March 2008 peak.

Says Liam Bailey, head of residential research at Knight Frank, “Prime central London house prices rose by 0.9% in June, meaning prices now stand 20% higher than a year ago. The recovery in prices has been driven, in large part, by the strength of demand from international buyers.

“The range of buyers has risen dramatically over the past year as the weak pound created opportunities for overseas purchasers to enter the market, with significant discounts on peak 2008 pricing.

“Despite the fact that prices have risen 24% since last March, and stand only 6% below their March 2008 market peak, the weakness of the pound ensures that effective discounts available to foreign buyers are still very significant. Chinese buyers are still able to secure a 31% discount on 2008 prices. Buyers from Hong Kong, the US, Saudi Arabia, Singapore and Malaysia are all able to secure discounts of around 28%.

“Between December 2008 and March 2009, international buyers’ share of the £5m+ London market soared from 39% to 48%. By June this year, it had hit 68%.

“Central London is now a market apart; not only is demand seemingly immune from wealth attacks, but so, too, is supply. The proportion of mortgage-free owners in central London is 59%, compared to 41% for the UK. Central London is dominated by discretionary owners; they can sell when they choose to, meaning that, when prices fall, so, too, does supply.”

For further information, go to www.knightfrank.com