London home prices took their worst fall in almost eight years in April, a decline fueled by property in the city’s most expensive neighborhoods.
The average asking price dropped 1.5% to £636,777 (US$813,000) this month compared to the same period last year, marking the largest annual dip since May 2009, according to a report from property website Rightmove released Monday.
The plunge is mainly driven by a 4.2% decline this year in central London, where the city’s most expensive homes are located. Rightmove said. With higher taxes and Brexit concerns, the luxury home market across London has suffered the most, posting an annual drop in asking prices of 7.3%. Overall, however, England has seen an upswing in home prices, with an annual increase of 1.1%. Even in London’s less expensive outer neighborhoods, asking prices have seen a jump, up 1.7 percent since last year.
“While the rest of the country enjoys a spring surge with most regions seeing a price boom and new price records, some parts of the London market are still re-adjusting,” said Rightmove director Miles Shipside in a statement. “The more discretionary upper end of the market is having to tempt buyers with cheaper asking prices, offsetting the higher purchase taxes.”
“Demand continues to be strong, but at the right price for the right property,” Mr. Shipside said.
A separate report from global real estate consultancy firm Savills released Monday confirms that the looming Brexit, the unexpected June 8 election and high taxes are not helping the luxury market, particularly in London.
“Our forecasts anticipate two years of lacklustre price growth during the Brexit negotiations, particularly in the prime markets of London which are most price sensitive,” Lucian Cook, Savills head of residential research, said in a statement.
According to Savills, the effect of high taxes is most pronounced in central London, where home values have dropped 13.2%since their peak in 2014, before the stamp duty overhaul.
Demand from international buyers cooled because of fears over Brexit, as well as the jump in capital gains and inheritance taxes, Savills said.
In London, homes worth over £10 millions have lost 15.5%of their value since 2014—those worth less than £1 million have retained their value, however.
“Sellers need to adjust their expectations of value to bring them into line with buyers’ expectations,” Mr. Cook said. “Prime central London vendors appears to have understood this and price cuts have begun to bring buyers back into the market.”
“In the rest of prime London, the gap between buyers and sellers remains wider, contributing to a pool of overpriced stock,” he added. “Further asking price cuts will be required.”
But there’s some measure of optimism for sellers in the future. Savills still expects to see London values rise in the next five years, with prime central London values expected to increase 21% by the end of 2021. Mr. Cook predicts that “as the prime markets adjust to the changed tax environment and benefit from greater certainty over the political and economic outlook, we expect a return to price growth.”
Follow Mansion Global:Facebook | Twitter | Instagram | LinkedIn | Messenger
Write to us: firstname.lastname@example.org