The Global Financial Crisis

Global Financial Crisis
 
Finding balance

27 July 2017, by Savills Research

Following a period of price adjustment and uncertainty in prime central London, values are starting to find a more balanced level

 

Subdued buyer confidence in the mainstream housing market (see Approach with caution) has been compounded by high stamp duty costs at the top end. This is most evident in London, where prices peaked in September 2014 and have fallen by an average of 6.9% since.

In the prime central London market, the weakness of sterling has been offset by greater exposure to capital gains tax and inheritance tax for overseas buyers. Price adjustment has been greater and, with values having fallen by more than 14% in this area, they are now back at December 2011 levels.

From March to June 2017, prices slipped by 1.3%. Although not significant, it is reflective of the price-sensitive nature of demand that has become the norm.

Outside the capital, the effect of taxation has been less significant. Here, the incidence of stamp duty is less acute and there was also weaker growth in the run up to the tax changes of two and half years ago. Still, annual price growth only averages 0.9%.

The increased popularity in prime urban property throughout and beyond the London commuter zone means the price gap to prime rural homes remains wide. Consequently, farmhouses, rectories and manor houses all look good value.

Across the prime market, sellers are increasingly aware of the need to match asking prices with buyer expectation. So, even with a thinner seam of demand, the right property at the right price continues to sell.

FIGURE 5

Role reversal Prime house price movements in other regions of the UK have recently been outperforming London and its suburbs

 
Figure 5

Source: Savills prime indices, Q2 2017

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Lucian Cook

Lucian Cook

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Savills Margaret Street

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Katy Warrick

Katy Warrick

Director
Residential Research

Savills Margaret Street

+44 (0) 207 016 3884