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UK house prices: ‘Tide turns’ in central London – Stamp Duty

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

LONDON BOROUGH Price:
November ’14
Price:
November ’15
Annual
% Change
KENSINGTON AND CHELSEA 1,933,492 1,658,563 -14.20%
CITY OF WESTMINSTER 1,618,918 1,385,797 -14.40%
CAMDEN 977,239 1,049,673 7.40%
HAMMERSMITH AND FULHAM 982,295 951,328 -3.20%
CITY OF LONDON 852,637 804,600 -5.60%
WANDSWORTH 735,658 789,115 7.30%
RICHMOND UPON THAMES 786,407 773,433 -1.60%
ISLINGTON 650,856 700,625 7.60%
SOUTHWARK 520,547 637,274 22.40%
MERTON 568,427 633,739 11.50%
HARINGEY 522,442 613,292 17.40%
BARNET 556,051 611,318 9.90%
EALING 513,257 606,001 18.10%
HACKNEY 523,044 589,164 12.60%
LAMBETH 520,399 559,716 7.60%
BRENT 499,942 543,277 8.70%
TOWER HAMLETS 449,294 515,588 14.80%
KINGSTON UPON THAMES 516,887 513,695 -0.60%
HOUNSLOW 468,822 504,562 7.60%
HARROW 433,413 489,725 13.00%
BROMLEY 415,222 456,810 10.00%
GREENWICH 375,108 447,187 19.20%
LEWISHAM 386,929 431,060 11.40%
HILLINGDON 368,265 422,290 14.70%
ENFIELD 371,565 416,049 12.00%
REDBRIDGE 369,539 415,639 12.50%
WALTHAM FOREST 359,211 411,215 14.50%
SUTTON 340,006 376,388 10.70%
CROYDON 325,292 362,518 11.40%
HAVERING 291,462 342,354 17.50%
NEWHAM 275,249 340,670 23.80%
BEXLEY 281,357 311,097 10.60%
BARKING AND DAGENHAM 225,068 258,631 14.90%
ALL LONDON 566,112 597,860 5.60%
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