House prices for London’s wealthiest areas have dropped 6.7% since 2014 and growth in 2016 is “unlikely,” according to Savills.
The property agent released a report on Wednesday saying that the most expensive markets of “prime” central London had dropped 0.8% in the first quarter of this year alone.
It’s a sign that London’s richest residents are feeling economic uncertainty in the wake of the rising stamp duty set to go into effect in April.
“Unlike other parts of the London housing market, the prime markets remain fairly price-sensitive and increasingly dominated by needs-based buyers,” said Lucian Cook, Savills’ head of UK residential research.
Cook added that stamp duty, as well as other variables, would continue to impact property transactions at the highest level for at least the rest of the year:
“Given historic levels of price growth, the increased tax burden and political uncertainty stemming from the pending mayoral election and EU referendum, our view is that we are unlikely see any price growth over the course of 2016 as the market continues its adjustment.”
In the last Autumn Statement, the government announced an increase in stamp duty — a tax on property purchases — to 3% on all second homes worth over £125,000 ($180,000). This change will come into effect on Friday, April 1.
However the Savills report stressed that not all of London is affected:
“By contrast, in the less expensive and more domestic outer prime London housing markets, which run from Richmond and Wimbledon, though Battersea and Wandsworth in the south and west, and Islington, Wapping, and Canary Wharf in the north and east, prices remained flat in the first quarter of the year, having risen between 2.6 and 4.2% over the past 12 months.”
As Business Insider previously reported, the ideal British home is “surprisingly modest,” and not necessarily central, suggesting demand for luxury properties is not as high as London’s housing reputation might suggest.