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Prime Central London Property Prices Drop by 12%
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Prime central London house prices have dropped by around 12% in the second quarter (Q2) of this year, according to the Land Registry.
Asset management firm, London Central Portfolio (LCP), has analysed the data. It says that the central London market is “fragmenting” due to higher taxes in the upper end of the market, such as increased Stamp Duty for homes worth over £1.125m and the annual tax for enveloped dwellings, which now applies to properties worth more than £1m.
Despite annual growth of 6.6%, prices have dropped by 11.9% from Q1 2015.
Prime Central London Property Prices Drop by 12%
However, flat and maisonette prices in this sector have grown at above average rates, rising 1.7% on Q1 and 11.9% over the past 12 months.
Chief Executive of LCP, Naomi Heaton, comments: “The new quarterly Land Registry results confirm the current state of play in the market, where there is a fast lane and a slow lane, with the brakes firmly on at the more expensive end.
“This comes as no surprise. Pre-election clouds loomed over central London for many investors at the beginning of the year, suppressing buyer activity. Ramadan and the traditionally quiet summer period has held back any conspicuous recovery.
“Coupled with some hard to swallow taxes for higher end properties, this period of subdued sales and price growth was anticipated.
“However, those targeting the mainstream private rented sector, ducking under the £1m mark, are still making sound investment decisions. As a commercial asset class, this market tends to be far less volatile and we anticipate a strong performance as investors return to the market.
“One word of warning: current annual growth levels of nearly 12% for flats and maisonettes are unlikely to be sustained. For the last four decades, average growth has been 10.4% per annum, so a tapering off of quarterly growth rates is still likely, to bring prices back in line with long-term trend.”1
Overall house prices in prime central London have risen by 8.3% in the last year, to an average of £1.509m.
Transactions dropped by 21% in the same period, to 5,170 for the year. This is the lowest figure since 2009. An annual fall of 27.6% in the houses sector worsened the fall.
The average property price in Greater London is now £537,308, an annual rise of 6.7% and up 2.2% on Q1. Transactions in Greater London dropped 9% over the past 12 months.
Across England and Wales, the average price in Q2 was £265,776, up 4.4% on the year and 1.4% on Q1.
There were a total of 844,030 sales in the last year, up 18.4% on Q1 2015.
Excluding the capital, the average price is £227,871, according to the Land Registry’s quarterly data. This is much higher than the £181,619 reported in the Land Registry’s most recent monthly house price index for June. The two figures were calculated using different criteria.
1 http://www.propertyindustryeye.com/prime-central-london-house-prices-drop-by-12/
