Price sensitivity is growing as concerns over the proposed mansion tax have been replaced by increased stamp duty costs.
Snapshot of Prime Central London Sales
Snapshot of Prime Central London
After considerable speculation surrounding the introduction of a mansion tax, the menace immediately disappeared following the Tories victory in the general election.
The number of new potential buyers registering in May was at its lowest monthly level in 2015 according to Knight Frank. The number valuations for new properties for sale, a pointer of supply was at its highest level in May 2015. This pattern which includes properties benefitting from interior designers London follows a seasonal trend but without any marked reaction to the general election in the last three weeks of May underlines the presence of an gap of expectation between buyers and sellers in London in relation to pricing.
Buyers appear to be weighing 2 issues that have collected fewer headlines than the mansion tax but are likely to gain in prominence this year. The first is pricing - despite an uncertain political climate, prime central London prices grew by a staggering 42% in the 5 years to June 2015. Annual growth in June slowed to 2% from 8.1% a year ago which imitates a more modest pricing environment and greater sensitivity to asking prices.
The second consideration is transaction costs - following an increase in stamp duty for properties worth more than £1.1 million, there is evidence that the higher rates mean some buyers are currently more prudent about moving property particularly at the luxury London property market. These extra costs have historically taken time to be absorbed by the market and reflected in pricing. It will be interesting to see what impact higher stamp duty rates have on tax revenues when government figures are released after the summer.
Luxury London Property Market
Prices grew 0.5% in June from a month earlier and at the current average rate of increase, annual growth will bottom out over the summer before a shallow upwards trend emerges later in the year.
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