UK house prices: ‘Tide turns’ in central London as property values tumble after stamp duty hike
House prices in central London dropped sharply in 2015 because of George Osborne’s stamp duty hikes for high-value property, according to research by LSL Property Services, which owns the estate agencies Your Move and Reeds Rains.
LSL’s house price index for December 2015 found London’s five most expensive central boroughs – Kensington and Chelsea, City of Westminster, Camden, Hammersmith and Fulham, and City of London – saw house prices fall by 8.7% on average over the year. In four of the five boroughs, prices dropped. Only Camden saw prices rise.
In his 2014 Autumn Statement, the chancellor increased stamp duty on expensive homes. There is now a 10% tax rate on properties worth over £925,000 and 12% on those over £1.5m. Since then he has also increased stamp duty on second home purchases, introduced a levy on properties owned by offshore companies, and other taxes targeting the top of the market.
“The tide certainly turned for the central London housing market last year,” said Richard Sexton, director of e.surv chartered surveyors. “The hike to the top rate of stamp duty has taken the wind out of the centre’s sails
Douglas & Gordon, a London estate agent, has reported a 64% drop in transactions on propertiesworth over £2m as the market stalled after the stamp duty changes. “If you choke off the top end of the top end, that has an effect all the way down,” warned Ed Mead, executive director of Douglas & Gordon. Henry Pryor, a property market expert and buying agent for luxury homes, said prices in London and the South East are “overcooked and therefore a period of adjustment is both overdue and highly likely.”
LSL’s house price index for the whole of England and Wales hit an average of £292,077 after rising 6.6%, or £17,963, over the year. Excluding London and the South-east, where houses are significantly more expensive, the annual rise was 4.7%. The pace of house price growth varied by region. The fastest was the South-east, where prices are growing at an average annual rate of 8.1%. Second place was the East Midlands, at 6.7%. Wales had the slowest growth rate of 2.5%.
LSL’s data for house price changes in London boroughs
|KENSINGTON AND CHELSEA||1,933,492||1,658,563||-14.20%|
|CITY OF WESTMINSTER||1,618,918||1,385,797||-14.40%|
|HAMMERSMITH AND FULHAM||982,295||951,328||-3.20%|
|CITY OF LONDON||852,637||804,600||-5.60%|
|RICHMOND UPON THAMES||786,407||773,433||-1.60%|
|KINGSTON UPON THAMES||516,887||513,695||-0.60%|
|BARKING AND DAGENHAM||225,068||258,631||14.90%|