Luxury-home values in central London rose at the slowest pace in about four years last month as high asking prices deterred buyers.
The average value of a house or apartment in the U.K. capital’s most expensive neighborhoods climbed 6.8 percent in October from a year earlier, according to an index compiled by Knight Frank LLP, a London-based broker. That’s the smallest increase since December 2009, when prices rose 6.1 percent.
“We are seeing a moderation in price growth across prime central London following a very strong performance over recent years,” Liam Bailey, global head of research at Knight Frank, said by phone. “Buyers in certain prime central London markets are becoming more resistant to ongoing price growth.”
Savills Plc, another broker based in the U.K. capital, said yesterday that luxury homes in central London will rise less than the average for all British residences through 2018. Knight Frank said values in Belgravia, Chelsea, Kensington and St. John’s Wood, four of the city’s priciest areas, were unchanged in October from a month earlier and Hyde Park and the South Bank districts had declines.
An increase in the transaction tax for properties sold for 2 million pounds or more fueled demand for luxury homes below that value, causing prices to rise 9.1 in the first 10 months of the year, Baily said in the report.
The biggest price gains in central London were on the edge of the City of London financial district, where values climbed 3.5 percent in October from the previous month.
House price growth will slow to 4 percent next year in central London from 11 percent this year, broker Cluttons estimated in a report today.
Rents for luxury homes in central London have been falling on an annual basis since June 2012, according to a separate Knight Frank report. The drop was 2.5 percent in October from a year earlier, similar to the previous two months. Rents in Mayfair, one of the most expensive districts in London, have fallen 6 percent so far this year.