House price declines in London’s most expensive neighborhoods showed no sign of abating in December.
In its final health check of London’s prime central housing market before the end of 2016, global real estate consultancy Knight Frank said the average cost of a home fell by 6.3% in the year to December.
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Hyde Park and Chelsea, which are home to the likes of Pippa Middleton and Russian oligarch Roman Abramovich, saw the biggest falls, both of 13.5%. This was followed by Kensington and Notting Hill, with drops of 11.3% and 9.7% respectively.
Sellers have had to adjust asking prices as the market responds to higher stamp duty rates at the top end of the market, which were introduced in 2014. Political uncertainty generated by the Brexit further exacerbated price cuts.
But the price decreases appear to be enticing some buyers to open their wallets as well, with November proving to be the second highest month in 2016 for sales volume (a number of buyers rushed to purchase properties in March 2016 ahead of another sales tax increase).
However, Knight Frank stressed that it remains to be seen whether strengthening sales volumes in the second half of 2016 will provide a reliable indicator for the first six months of 2017.
"Political uncertainty is unlikely to subside in the early part of next year as the U.K. triggers the process to leave the European Union, Donald Trump potentially charts a new economic course in the U.S., and ahead of elections in several European countries," said Tom Bill, head of London residential research at the firm.
"However, as the 2016 sales volumes data shows, sufficient pent-up demand has formed for buyers to act when they perceive value."
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Separate figures, also from Knight Frank, showed that prime Scottish country house prices fell 1.1% across 2016, following a 0.4% decline in the final three months of the year.
