Property prices in London’s posh Chelsea neighborhood have adjusted to higher rates of property tax more than any other market in prime central London, according to a report Thursday from Knight Frank.
In April, sales prices in Chelsea were 15.5% below the neighborhood’s previous market peak recorded in August 2015, the real estate consultants said. Prime central London as a whole, on the other hand, saw prices decrease 8% in the same timeframe. The lower property prices are compensating, in part, for the stamp duty tax increase introduced in 2014, which targeted high-end and second home buyers in particular.
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In addition to the stamp duty changes, the London market has also been especially affected by the uncertainty around Brexit, which has caused prices and transactions in the city to fall.
As a result of the price corrections, the number of transactions in Chelsea has been on the rise. The total value of sales in the neighborhood in December 2017 was the highest for a single month since July 2014, the report said.
Meanwhile the average price in Chelsea in the year to March was £1.54 million (US$2 million), up from £1.41 million in the year to March 2017 (US$1.88 million), and up from £1.31 million (US$1.75 million) in the year before that.
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"Activity in Chelsea is linked to a fairly traditional group of buyers and sellers who are driven by their job, schools or a need to downsize. This means more transactions are needs-driven and prices have had to adjust more readily," said James Pace, head of Knight Frank’s Chelsea office, in the report.
"As a result, demand has strengthened notably over the last 12 months and we now frequently see competitive bidding for well-priced properties," Mr. Pace said.
Price declines are bottoming out, though, according to the report. The annual price fall was 1.9% in April, a vast improvement on the annual decline of 11.7% logged in March last year.