Prime central London prices still rising but tax changes affecting some sectors
28-09-2012
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However tax changes have affected some sector of the market with the number of sales in the £2 million to £5 million segment falling 20% in the three months to September compared with the same period last year.
The Knight Frank index for September 2012 also shows that average prime property values in central London now stand at a new record high, some 15% above their pre crisis peak of March 2008.
This growth in prices has taken place despite the impact of the March budget's 40% rise in the top rate of stamp duty together, said Knight Frank’s head of residential research Liam Bailey.
He also pointed out that new, and still undefined, rules for an annual charge on £2 million plus properties held in certain ownership structures and the reform of non-resident capital gains tax rules are also on the cards.
‘But the budget tax changes have had an undeniable impact on activity levels in the market, with the volume of sales in the £2 million to £5 million sector falling 20% in the three months to September compared to the same period in 2011,’ said Bailey.
‘Sales volumes above this bracket have been more robust, and there has also been a strong 23% rise in sales volumes for homes worth up to £2 million. The sub £2 million bracket is also where price growth has been strongest, with an annual increase of 11.6%,’ he added.
Despite the weaker transaction volumes in the £2 million to £5 million bracket, the number of prospective buyers has been fairly evenly matched with available properties across all price bands, the index also shows.
‘It is worth noting however that over the last six months, stock volumes have slowly begun to creep upwards, and are now around 10% higher than in September last year,’ explained Bailey.
The strongest markets in central London have been those areas located around Hyde Park, with higher than average price growth recorded in Knightsbridge, Hyde Park, Marylebone and Belgravia over the past 12 months.
Bailey pointed out that London’s market performance continues to be aided by overseas buyers, who account for 41% of buyers in the £1 million plus prime London sector, and more than 50% of buyers in the £2 million plus market.
This overseas demand is driven by Russian, Indian, Italian, US and French buyers, added Bailey, reflecting the diversity of the market.
The Knight Frank Prime Central London Index, established in 1976, is the longest running and most comprehensive index covering the prime central London residential marketplace. The index is based on a repeat valuation methodology that tracks capital values of prime central London residential property.
Prime central London is defined in the index as covering Belgravia, Chelsea, Hyde Park, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, Regent’s Park, St John’s Wood, the City and the City Fringe.
Prime London comprises all areas in prime central London, as well as Canary Wharf, Fulham, Hampstead, Richmond, Wandsworth, Wapping and Wimbledon.
