London’s residential property prices have risen +20% in the 12 months to the end of March 2010, according to Knight Frank, meaning they are growing at the fastest rate since March 2008 and are now only -9% below their peak.

Liam Bailey, head of residential research at Knight Frank, said: “The rapid growth in London’s pricing reflects not only the stimulus given to the market from low interest rates and the weak pound - which have driven domestic and international demand - but also to very thin supply over the year, set against very healthy interest from buyers.

“The balance between purchasers and vendors has become more even in recent months. In the final quarter of 2009, our local offices recorded ten new buyer registrations for every new sales instruction - well above the long run trend of 5.5. By March this ratio had dropped back to seven as more vendors began to bring properties forward for sale on the back of rising prices, and also as buyers began to delay activity in the run up to the budget and the election.”

The growth in prices has been led by the lower section of the market, in particular the sub-£2.5m sector which has prices increase by +23%. The higher end price brackets (£5m+ sector) have seen a +17% increase.

Bailey said: “This growth has not been evenly spread, and it has been the low to mid end of the market which has seen the strongest growth. The more expensive price brackets have lagged, reflecting the fact that the recovery in pricing started later in this part of the market.”