Member Article

London house prices see 1.6% growth despite ‘buyer caution’

Property prices across London’s prime housing market grew by an average of 1.6% in the three months ending 30 June 2015.

However, values remain 0.7% below where they were a year ago, according to a report from estate agents Savills.

The stunted growth came as a result of increased stamp duty rates and uncertainty during the General Election in May, Savills reports.

This buyer caution was most evident at the top end of the market, the report says, with property prices in prime central London showing net house price growth of just 0.3%, meaning house prices in this market or down by an average of 4.3% on last year.

Lucian Cook, head of UK residential research at Savills said: “The stamp duty increases introduced in December 2014 mean they now also looked fully taxed, despite mansion tax fears being confined to history,

“In the early part of the year we could put buyer reluctance to commit down to political uncertainty pre-election. Only now is the dual effect of taxation at the top end of the prime market and mortgage regulation at entry level becoming clear,”

Despite rising an average of 2.4% in the quarter, the remainder of the prime London market homes worth over £2m fell by an average of 0.9% over the past year.

The market below £1m, the bracket in which buyers benefitted from the stamp duty reformed announced in the Autumn Statement, recorded annual price growth of 2.4%.

Cook concluded: “These constraints are keenly felt by buyers, while some sellers are clinging to expectations that values can keep on rising. That has created a gap in price expectations in parts of the market which is likely to hold back any recovery in transaction levels,’ he pointed out.

“With those transactions having been suppressed prior to the election, it seems inevitable that high value sales will have peaked, at least in the short term, in 2014.

“That means current constraints on the market could have a negative on impact on stamp duty receipts from most expensive housing upon which the Treasury has become increasing reliant,”

This was posted in Bdaily's Members' News section by Ellen Forster .