- Values for all prime properties in London rise 0.7 percent
- Prime central prices fall 0.4 percent from previous quarter
Luxury-home values in London’s priciest central neighborhoods fell in the third quarter as higher taxes introduced in December damped demand and encouraged buyers to seek discounts.
Average prices declined 0.4 percent in areas such as Knightsbridge and Belgravia that Savills Plc defines as prime central London, the broker said in a report Wednesday. Values in the best districts in the wider city increased by 0.7 percent in the period compared with the second quarter and were unchanged from a year earlier.
Sales of luxury homes have slowed since Chancellor of the Exchequer George Osborne increased the stamp-duty sales tax for the most expensive homes in December. The levy escalates to 12 percent on every pound a buyer spends above 1.5 million pounds ($2.3 million), with the purchaser of a 5 million-pound home paying 513,750 pounds in duty, almost 164,000 pounds more than before.
“The increased transactional costs over 1 million pounds have undoubtedly made buyers more cautious,” Lucian Cook, head of residential research at Savills, said in an e-mailed statement. “Particularly as the stamp duty change came when parts of the market were beginning to look fully priced after five years of steady growth."
Prime central London values are down 4.6 percent from a year earlier after dropping in three of the last four quarters. Prices for properties valued at 500,000 pounds to 1 million pounds, which are subject to lower stamp-duty charges, rose by 3 percent year on year and values for homes from 1 million to 2 million pounds increased by 0.9 percent, Savills said. Prices for properties worth more than 2 million pounds fell by an average of 2.6 percent, the broker added.
“For all but the very best in class properties, many buyers are expecting a discount on last year’s prices at least equivalent to the additional tax,” Cook said.
Ten properties are for sale at One Hyde Park in Knightsbridge, according to Henry Pryor, a U.K.-based luxury real estate broker. The complex developed by the Candy brothers’ CPC Group and closely held Waterknights, has secured some of the highest prices ever paid for apartments in the capital, including one was valued at as much as 175 million pounds when it sold in April of last year.
“It’s unusual for buyers to have such a choice in London’s poster boy for high-end residential,” Pryor said in a telephone interview, “The fact these properties are for sale tells us that owners are nervous and looking to cash in before prices fall.”