Savills predicts two further years of little or no growth for the prime London residential market in its latest Prime Spotlight.
Prime prices have fallen by 6.9% in the year to March in central London and by 3.9% in the outer boroughs. Meanwhile, in the South East and outer south they have risen by 2.4% and 2.6%.
According to head of residential research Lucian Cook, the fall in value of the pound has not had the same impact that it has had in previous cycles.
He says buyers are deterred by a lack of certainty about future falls and the higher tax environment which, alongside stamp duty, includes changes to capital gains tax and inheritance tax.
Prime central London values are now 13% below their 2014 peak, and quarterly falls of up to 2.8%.
There are some signs of stabilisation as sellers become more realistic in their expectations, but the various tax changes and crisis of sentiment continue to affect performance.
“Sellers need to adjust their expectations of value to bring them into line with buyer’s expectations,” says Cook. “Our view is that however highly taxed the top end of the market is, and whatever the undoubted economic inefficiencies this creates, a rate cut in the short term remains only a possibility… As such, buyers will need to continue to factor the charges into their purchasing decisions for the foreseeable future.”
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