Prices in prime central London (PCL) have risen in all sectors outside the top 20 percent of the market since 2014, according to London Central Portfolio (LCP).
Average prices for PCL overall, however, are just one percent higher than in Q3 2014.
LCP’s research looked at all market transactions and found that the leading factor impacting property performance in PCL has been the Stamp Duty changes, implemented at the end of 2014.
According to the statistics, the bottom 40 percent of the market has actually recorded double digit price growth since Q3 2014. This represents all property under £936,000, the exact level where the graduated Stamp Duty sees an increase, rather than a decrease.
The bottom 10 percent of the market, where prices now average £388,688, put in the strongest performance, recording 16 percent growth. For these buyers, Stamp Duty has fallen with an average £2,227 saving. Price growth of properties above this up to £936,000, representing the bottom 10 percent - 40 percent of the market, has been 10 percent.
On the other hand, properties in the 80 percent - 90 percent price bracket, which average £2.8 million, have seen a significant increase in Stamp Duty, ranging from an average of £54,935 or £139,645 if the Additional Rate Stamp Duty (ARSD) is liable. This sector has seen nil price growth since the changes in legislation in 2014.
For the top 10 percent, where prices average £6.5 million, was the only decile to see falling prices, which now stand 8 percent lower than in Q3 2014. Where ARSD is payable, average Stamp Duty here has almost doubled from £456,092 to £891,089.
Naomi Heaton, chief executive of London Central Portfolio, commented: “The luxury sector, and particularly the top 10 percent of the market, has been hard hit by a series of new taxes. Our research has shown that changes to Stamp Duty has had a fundamental impact, with a 19 percent down turn in prices from the Q3 2014 peak to the trough in Q2 2016.
The long term outlook for the sector, however, remains compelling as a global destination with exclusive and limited stock. Whilst it may take a while for prices to fully correct as they adjust to the additional ‘buy-in’ costs, there is evidence this is already happening. Since the trough, prices have seen a recovery and now stand at 8 percent below the peak.”
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