Simon Dawson/Bloomberg

Luxury London Home-Price Increases Slowing on China, Sales Tax

  • Annual price growth of 1.7% lowest in more than five years
  • Sales volumes fall as buyers delay deals on yuan devaluation

Homes values in prime central London rose by the least in more than five years as higher taxes damped demand and Chinese buyers were deterred by their currency’s devaluation.

Prices climbed 1.7 percent in the year through August in the 13 districts that Knight Frank LLP defines as the capital’s prime areas, the broker said in a report Monday. Values fell 2.4 percent in Knightsbridge and 4.6 percent in Notting Hill.

China’s biggest devaluation of the yuan in two decades and turmoil in the nation’s stock markets is prompting some buyers to delay purchases, according to Knight Frank. Last year’s increase in the so-called stamp duty tax for U.K. homes that cost more than 937,000 pounds ($1.4 million) also curbed demand, with sales falling 30 percent in the three months through July.

“Buyers have been in a restrained mood,” Tom Bill, head of London residential research at Knight Frank, said in the report. “The events of the last 12 months have had a greater impact on longer-established higher-value
prime central London markets.”

Chinese investors are still interested in buying properties in districts like Mayfair, the broker said.

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