Home prices in London’s Knightsbridge district dropped 7.3 percent in the 12 months through July, the biggest annual decline in almost seven years, as Britain’s vote to leave the European Union accelerated price drops caused by rising taxes.
Values fell 1.5 percent across central London’s best districts, with prices in Chelsea down 7.2 percent, broker Knight Frank said in a Wednesday report. Rents in the area known as prime central London fell 3.6 percent in the period and the number of new properties offered for lease rose 49 percent in the second quarter, according to data compiled by the broker.
“We have seen a reduction in prices in Knightsbridge since the second quarter of 2015, mainly as a result of the adjustment to stamp duty changes and overly ambitious asking prices,” Rupert des Forges, head of Knight Frank’s office in the neighborhood, said by e-mail.
A three percentage-point increase in the stamp duty sales tax for landlords and second home owners came into effect in April, on top of an increase in charges for all luxury-home purchasers in 2014. Home values face a “major shock” as landlords sell properties after the measures which, along with new lending rules, reduce returns to near zero, analysts at Deutsche Bank AG said in June.
The Brexit vote has “reinforced” existing trends for both home prices and rents in central London, said Tom Bill, head of London residential research at Knight Frank. Weaker prices mean some owners are choosing to rent out properties instead of selling them and the additional supply is damping rents, he said.
Rents dropped 8.2 percent in the Marylebone district, the most in central London, the data shows. They fell 7.2 percent in Riverside, a district defined by Knight Frank as running from Battersea Bridge to Tower Bridge along the south bank of the River Thames. It includes the Nine Elms district where developers plan to construct 20,000 homes.
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