Apartment prices in London will continue to increase steadily this year following an upsurge in capital values over the past 12 to 18 months, property consultants say. Chan Yiu-kwan, associate director of Jones Lang Wootton's international division, said prices in in the City increased more than 20 per cent last year. He was optimistic and predicted a 10 per cent growth in apartment prices this year. This compared to Halifax Building Society's predicition of a 7 to 8 per cent rise in home prices, Mr Chan said. The monthly house price index showed prices throughout the country were 12.1 per cent higher than in August last year, according to the National Building Society. Hamptons International reported that although apartment supply levels had risen, demand had remained strong and had continued to outstrip supply. With properties coming on to the market in London and the country in the second quarter, three times as many applicants in London and four times as many in the country had registered for property to rent, the company reported. The number of transactions arranged in the country during the quarter rose by 40 per cent compared to the same period last year. Mr Chan said more than 100 schemes were expected to be planned or built. These would provide 14,000 homes. Supply would be concentrated in central London - on the fringe areas such as Euston Road, the Thames, Midtown, Clerkwell and Docklands. Rented accommodation was in short supply and rental levels had increased by 9 per cent last year, he said. According to a recent study by London Residential Research, flats worth more than GBP2.7 billion (about HK$33 billion) are under construction in London, about half of which had been snapped up by Asian buyers. Mr Chan said the buyers were attracted by encouraging yields on the investments and the economic conditions. Yields were 8-10 per cent net per annum, which was relatively high compared to the 3-4 per cent achieved on residential investments in Hong Kong and Singapore. Mr Chan expected demand for investment property from Asian investors to remain strong in view of the relatively inexpensive capital cost and low economic and political risks. The gross domestic production growth in Britain is about 3 per cent with inflation running at 2.6 per cent. No capital gains tax was imposed for non-residential but trading tax applied to those who had owned for less than two years. Mr Chan said the British Government was predicting a 23 per cent increase in household numbers over the next 20 years. This translated into seven to eight million units and it expected a shortfall in supply.