- House prices in hyper-expensive prime central London are starting to recover after a chaotic 2017.
- Knight Frank found that prices in the area declined 0.7% in the year to January, ticking up from -6.7% in January 2017.
LONDON – House prices in hyper-expensive prime central London are recovering after a chaotic run.
New data from Knight Frank found that prices in the area declined 0.7% in the year to January. The relatively modest nature of the price fall contrasts sharply with the annual figure of -6.7% measured in January 2017, and suggests the declines of the last 20 months have bottomed out.
There are other signs of recovery, too. A growing number of new prospective buyers relative to the new number of properties being placed on the market typically indicates that prices are ready to tick up. After four successive years of declines, the ratio of new buyers to new properties finally rose in 2017, as price declines became more modest.
Should the trend continue, prices are likely to tick into positive territory.
What happened in prime central London?
Loosely, Prime Central London is defined as the boroughs in the very centre of the capital, including Westminster, Kensington & Chelsea, and Notting Hill.
The market, which counts a large proportion of wealthy foreign buyers, was hit badly by changes to stamp duty – a tax levied on every house purchase – which made it significantly more expensive to buy a house priced over £1 million.
If you happened to be buying a second home – as many in prime central were – a further 3% surplus was added to the stamp duty bill.
Brexit uncertainty also played a significant role, especially among overseas buyers, as well as recent changes to capital gains tax for foreign investors which offset the discount offered by a cheaper pound.
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