Top London property prices 'pushed down by taxes and Brexit vote'
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Version 0 of 1. Higher taxes and jitters over the EU referendum pushed down high-end London property prices last year as sellers accepted more “realistic” offers, according to upmarket estate agent Savills. But while owners of multimillion-pound London homes were forced to rein in their expectations, housebuilder Persimmon reported rising revenues from sales of less expensive homes around the country. Savills said prices for prime central London properties fell by 6.9% compared with last year and 4.9% when including the rest of the capital. But the real estate firm said a collapse in the number of sales had slowed as sellers adjusted asking prices to reflect increases in stamp duty and the dampening effect of the Brexit vote. Lucian Cook, Savills’ UK head of residential research, said this helped ease a slump in sales volumes since April, when a 3% stamp duty surcharge was imposed on second homes, triggering a rush to complete transactions before a 1 April deadline. “After that peak, you had a lull in transactions, which was compounded by Brexit, leading to a very slow summer market,” said Cook. “Since the vote we’ve seen a further softening but in the post-summer period there have been progressively improving transaction levels. “Sellers became much more realistic on price as they adjusted to the market reality.” The number of £1m homes sold in 2016 was down 21% year on year, according to data firm Lonres. But this represented a strong rebound from the three months to July, when sales volumes slumped to half of 2015 volumes after the stamp duty change. Sales of £5m homes in the 11 months to the end of November proved more resilient at 17% lower than 2015, Savills said, with transactions adding up to £3.7bn. And the most expensive homes worth more than £20m resisted any downturn at all, with £1.4bn spent in the first 11 months compared with £1bn the year before. Savills said the 6.9% fall in prime central London property prices was not as steep as the 9% it predicted earlier in the year. But Cook warned sellers should not see improved conditions as an indicator that prices are due to rise again. “Improved transaction levels are the result of adjusted pricing and should not be seen as a precursor to price rises in the foreseeable future. “High stamp duty rates and the uncertainty created by negotiations to leave Europe will still need to be factored into expectations on value.” Savills expects prime London property to remain stagnant for the next two years, with prices down 12.5% since December 2014, when the government increased stamp duty on the most expensive homes. While Savills reported lower prices for upmarket London property, housebuilder Persimmon enjoyed rising revenues as the availability of mortgages helped boost prices for less expensive homes. The firm’s average selling price was up 4% to £206,700, boosting its sales by 8% to £3.1bn, while legal home completions grew by 599 to 15,171. “Sales reservations through the autumn season were strong with healthy customer demand for new homes,” said Persimmon. “Buying a new-build home remains a compelling choice supported by competitive mortgage offers which continue to make a new home purchase very affordable.” The builder was the best performer on the FTSE 100 on Thursday morning, with shares up more than 5%. Persimmon will report full annual results on 27 February and said it expects to report improved conditions in the second half of the year. |