House prices in London’s so-called “prime central market” plummeted by up to £2,000 a day in September, according to new analysis from online estate agent eMoov.
The research, which analysed Land Registry data, found that property values in prime central areas such as Westminster fell by -6%, in Camden by 3%, and in Islington by -1%. That is despite average UK house prices rising by 5% in the same period.
The 6% drop in Westminster would represent a loss of £65,000 over the month from the average house price of £1,029,884. Should prices continue decreasing at that rate, the average house would lose 72% on the value of a property within 12 months.
eMoov chief executive Russell Quirk said that he does not expect the decline to continue at that rate, but told Business Insider that it was “the start of a trend” of declining prices in the prime market.
Research in September by estate agents Savills estimated that London’s overall prime market will fall 9% by the end of 2016. Quirk insisted that the decline is not related to Brexit, despite Savills’ research suggesting otherwise.
He said: “There is a misnomer of the London prime central market being affected by Brexit in terms of price reductions, but Brexit is nothing to do with it. It was happening a year and a half ago.”
Quirk said the decline, which is “completely out of sync” with the rest of the UK, is primarily a consequence of three factors:
- A “natural correction in what was becoming an overinflated sector.” In other words, the prime property bubble has burst, after being spurred on by incredibly high demand for a small number of properties, and by heavy foreign investment.
- The stamp duty penalties that were imposed in September 2015 by George Osborne, which meant that properties above £1.5 million effectively have a 12% levy attached to them.
- Osborne subsequently introduced an additional levy in April 2016 which made a buyer’s second home subject to an additional 3% stamp duty.
Quirk said: “This research stands as a warning to London’s most prestigious homeowners of what could happen and evidently already is.”