A new survey has revealed the predictable truth about London's property market...

according to the survey compiled by Knight Frank and Citi Private Bank, London is the world's most expensive place to buy a home, followed by Monaco and St Jean Cap Ferrat in southern France. The average price of a property in the best locations of central London was US$66,615 ($85,152) per sq m, according to the firm's just-published Prime International Residential Index.

Monaco averaged US$63,354 per sq m and properties 8km west along the Mediterranean coast in St Jean Cap Ferrat cost US$62,978 per sq m, the London-based firm said. London benefited from its position as a global centre for finance while its nearest contenders are attractive as Mediterranean second-home "hot spots".

Knight Frank's index showed that average prime home prices in London increased 29 per cent last year, trailing the 31 per cent annual gain in Singapore and exceeding the 25 per cent increase for New York.

Slowdown expected this year?

Liam Bailey, Knight Frank's head of residential research, commented: “Growth in property values has been strongest in the main global financial centres and those with benign tax jurisdictions.

"Luxury home prices in London may only rise 3 per cent this year as thousands of bankers and financial services workers in the British capital lose their jobs in the wake of losses and writedowns from investments in sub-prime mortgages, Knight Frank estimates.

Most expensive places to buy homes:

•  London: US$66,615 per sq m
•  Monaco: US$63,354 per sq m
•  St Jean Cap Ferrat: US$62,978 per sq m
• Courchevel: US$50,679 per sq m