According to Knight Frank’s latest Prime Central London Index, the residential housing market grew by 1% between November and December 2007.

Growth on an annual basis also continued to slow but last month’s figure of 28.6% was at a level similar to December 2006’s 28.7%. Also, the area with the greatest monthly growth rate was the South West region of Central London at 1.8%.

Liam Bailey, head of residential research at Knight Frank, said: “Coming amid largely pessimistic debate about the impact of the international credit crunch, December’s Knight Frank Prime Central London figure of 1% growth appears to buck the trend of recent months. The quarterly figure also supports the notion that this particular market is steadying with growth slowing just 0.2% to 1.4% over the quarter.

“Although the annual growth rate slowed again to 28.6% it is worth noting that this is only 2% lower than January’s year-on-year rate and almost identical to the figure recorded in December 2006 (28.7%) which at that stage was the highest since June 1979.

“It would be unwise to suggest that London’s prime market has weathered the credit crunch on the back of these figures. Indeed most indicators suggest that tightening economic conditions will continue and this may well result in job losses across the city. If this is the case it will inevitably lead to property purchase becoming a discretionary as opposed to investment making process.

“We are satisfied with our forecast that the prime sector in London will grow at 3% in 2008 in parallel with that for the rest of the property market throughout the UK. However we believe that various parts of the prime market may exhibit little if any growth in 2008. Properties in the super prime sector meanwhile will continue to return the best rates of growth of anywhere between 5-10% as overseas investors from countries untouched by the international credit crunch enter the market.”