The first months of spring saw a very active market in South Kensington. Subdued stock levels along with buyers competing for properties pushed the average sales price up by 14% in the first quarter, significantly outperforming the national average which saw falls of -0.9%.

The deluge of holidays during April led to a cooling in market activity which has continued into the summer making the market harder to predict.

Price growth has slowed with Primelocation showing a -1.3% fall in prime Kensington & Chelsea property values in the last two months. As with 2010, the second half of the year looks set to be quieter than the first, although demand remains strong for the right properties.

The top end of the market is still resilient which is reflective of strong demand from cash-rich purchasers, primarily from overseas. We recently marketed a property on Cornwall Gardens Walk at £2.15m. A Chinese buyer viewed the property for his daughter and although not suitable for her, he bought it for himself for investment purposes.

Data from the Land Registry shows that transactions of properties over £1m in the first three months of 2011 were 25% higher than the same period last year and property sales over £2m were 47% higher.

The lack of choice however, notably at this end of the market and for particular properties, is a significant and ongoing theme; average new instructions in April and May fell by 37.5% compared to the first three months of 2011.

The strong appeal of London as an investment choice and residential property as a desirable asset class ensures continued and competing demand from domestic, international and institutional buyers.

However as the market balances out, buyers are increasingly price sensitive. Competition among agents for those properties which do come to the market has resulted in unrealistic valuations by some. Overpriced properties will generate little interest, while those priced at a realistic level are attracting significant attention.

If you would like to discuss the market or how we can help you sell your property please contact Winkworth South Kensington Estate Agents on 020 7373 5052.