Average prices of £5 million-plus properties in London have dropped by almost 10% over the past year as higher stamp duty rates dampen demand for upmarket homes in the capital.
According to LonRes, a property data provider, average prices per square foot in all price brackets in prime central London were down 3.7% in the final three months of 2015 compared with the same period a year earlier.
The largest drops were in the highest price thresholds, with the cost per square foot for properties over £5 million falling by 8.6% over the period. This also was the price threshold that suffered the greatest drop in sales over the year.
The only price bracket in which prices rose over the course of the year was for properties that sold for less than £1 million, with average sales prices per foot for these properties rising by 7.8%.
Sales were dented late in the year, with the final quarter of 2015 delivering 22% fewer transactions than in the same period of 2014, LonRes reported. In particular, the number of £5 million-plus homes that changed hands plunged by 53.5% in the same period.
The chancellor slapped higher stamp duty rates on more expensive homes in December 2014 and made it cheaper on average for those purchasing homes worth less than £1 million. The data of late 2014 was skewed by the surprise change to stamp duty and many buyers at the very top end of the market rushed to buy in the first days of December 2014, pushing up sales.
Under the old system, a buyer of a £2 million home would have had to pay £100,000 in stamp duty, but this has risen to £153,750. The cost for a £6 million property has jumped from £420,000 to £633,750.
Anthony Payne, the managing director of LonRes, said that in addition to higher stamp duty rates, increases in the value of sterling against other currencies and tax changes to non-doms [someone with non-domiciled status] also had weighed on interest. “Even the election of a Conservative government, putting paid to concerns over the introduction of a mansion tax, failed to spur on the market. As a result, transaction levels fell over the year and prices started to fall back in some parts of the market,” he said.
In the autumn statement in November, George Osborne unveiled a 3% stamp duty surcharge on the buying of second homes and for those investing in buy-to-let [rental properties], which will be introduced in April.
While demand is expected to rise before April, as buyers rush to beat the deadline, this market is expected to be quieter after Easter.
This article originally appeared on The Times of London.
Follow Mansion Global:Facebook | Twitter | Instagram | LinkedIn | Messenger
Write to us: email@example.com