Momentum across much of the London property market remains subdued. Across prime central London average prices fell 1.1% in the year to March, according to Knight Frank; the fourth consecutive month of marginal annual adjustment, with the agency reporting prices are now 8% below their 2015 peak. Across the capital as a whole, average prices fell by 1.0% in the year to February, according to the UK House Price Index, the first time annual growth has been negative since the global financial crisis.
While prices continue to stabilise across prime London, data from LonRes indicates that new instructions across the market are on the rise, up 8.4% during the first quarter of 2018 compared to a year ago. However, a lack of buyer demand across much of the market means sales volumes, especially across the core £1m-3m market, remain muted. While the number of properties sold across prime London in the year to March 2018 was up 6% compared to the previous 12 month period, sales in the first quarter of 2018 are lower than during the same period last year, with RICS reporting London agents are noting a rise in the number of properties being withdrawn from sale.
With the market remaining sensitive to political events, the effects of higher transactional costs are now being absorbed by vendors. According to LonRes, across the core prime London market (£1 million – £5 million), the average price adjustment for sales in the year to February was -9.9%. This more than compensates for the rises in stamp duty. The difference between the new and old rates of stamp duty as a percentage for a £2 million sale are an additional 2.7%, or 5.7% including the second home surcharge. For a £5 million sale this represents 3.3% or 6.3% respectively.
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