London luxury residential property falls in value

on Mar 26, 2015
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Central London residential property has dropped in value recently, possibly due to the stamp duty reform introduced by the Chancellor. All areas of ‘luxury London’, such as Notting Hill and Mayfair, witnessed prices drop in the first three months of 2015 when compared with the previous three months, according to new research from Savills.

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Luxury property east of the City experienced the most severe quarterly drop of 1.5 percent according to Savills. Over the year to March 2015, high-end residential property in London’s prime locations fell 4.3 percent.

Most industry analysts expect any fall in property prices in the capital, particularly centrally located property, to be temporary as both domestic and international demand for UK real estate remains strong.
In spite of these widely held views, there is growing evidence that the new stamp duty system is beginning to bite at the upper end of residential property investment in London.
“As we forecast in November, uncertainty regarding the general election and the potential for further taxation of high value property have contributed to a subdued market in the first part of 2015,” said Lucian Cook, head of UK residential research at Savills.
“The stamp duty changes came after five and a half years of sustained price growth for prime London property. This segment of the the market is now looking fully taxed and sellers are having to factor in price adjustments equivalent to the stamp duty increase
High-end apartments and houses in London can sell for millions and as such the market can be very sensitive to any changes in the taxation system. Noting that this makes the upcoming general election of particular relevance with regard as to how the market will fare, Cook commented:
“Certainty will allow buyers and sellers alike to take account of the impact of any fiscal change.”
The degree to which market sentiment towards expensive London properties may have become less optimistic than has been the case in recent years remains to be seen. With the general election taking place in May, it could well be late summer before analysts can say if property prices have peaked of not.

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