Prime London house prices grew marginally over the summer months as the market continues its adjustment to the higher stamp duty charges introduced in December 2014, the latest index shows.
This means that average values are back to levels seen a year ago, according to the Savills prime London index.
Overall average prices across all prime London’s housing markets rose by 0.7% in the three months to the end of September, while the prime central London average fell slightly, by 0.4%.
The data also shows that year on year prime central prices are down 4.6% while the whole of the London prime market saw no change. But prices are still up considerably over five years by 28% and 35.8% respectively.
However, Savills says, these averages mask variations in price growth, which now relate as much to the different value bands as to location. Over the past year, price changes have broadly reflected stamp duty increases at different price points and therefore growth has been concentrated in the sub £2 million market.
Homes in the £500,000 to £1 million range, which are subject to lower stamp duty charges, have risen by 3% year on year, and in the £1 million to £2 million range by a marginal 0.9%. By contrast, those over £2 million have fallen by an average of 2.6%.
‘The increased transactional costs over £1 million have undoubtedly made buyers more cautious, offsetting any post-election euphoria, particularly as the stamp duty change came when parts of the market were beginning to look fully priced after five years of steady growth,’ said Lucian Cook, head of residential research at listing adviser, Savills.
‘For all but the very best in class listings, many buyers are expecting a discount on last year’s prices at least equivalent to the additional tax. By contrast, stamp duty changes have benefitted listings in lower tiers of the prime market, which have performed more strongly,’ he explained.
‘The prime London market now looks fully taxed and buyers are slower to commit, which is likely to continue to constrain the market in the short term, however the medium term fundamentals of demand for prime listing in the UK capital remain positive. This has been reflected in a busy September in the new build market, where best in class is recognised,’ he added.
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Source: Property News Spain