Lackluster Prices in London

New data offer more evidence that the luxury market in London has hit a rough patch. Prime residential prices in London grew marginally in the third quarter and are now back to levels seen a year ago, new data show. Savills found that average prices across all prime housing markets in London rose by 0.7% in the three months that ended in September compared with the previous quarter. Values in prime central London fell by 0.4% over the same period. The U.K.-based real-estate services provider said the market was still adjusting to higher property-sales tax for expensive properties that went into effect at the end of 2014. Furthermore, Savills believes the new averages “mask variations in price growth, which now relate as much to the different value bands as to location,” with growth concentrated in the £2 million-market. More: Prices Soften in Prime London Neighborhoods “For all but the very best in class properties, many buyers are expecting a discount on last year’s prices at least equivalent to the additional tax. By contrast, stamp duty changes have benefitted properties in lower tiers of the prime market, which have performed more strongly,” says Lucian Cook, head of residential research at property adviser at Savills, in a statement. According to the firm’s report, prices for homes in the £500k-to-£1 million range, which saw lower taxes after the 2014 changes, have risen by 3% in the last year. In the £1 million-to-£2 million range, prices have risen by a marginal 0.9%. By contrast, prices for homes over £2 million have declined by an average of 2.6%. Prices in all prime London were unchanged from the third quarter of 2014, while the annual decline for prime central London was of 4.60%, according to Savills’ prime London index. "The prime London market now looks fully taxed and buyers are slower to commit, which is likely to continue to constrain the market in the short term,” Cook said. “However, the medium-term fundamentals of demand for prime property in the U.K. capital remain positive." Read the full report here.Write to Andrea López Cruzado at andrea.lopez@dowjones.comFollow Mansion Global on Facebook, Twitter and Instagram Write to us at info@mansionglobal.com