Prime London house prices rose by an average of 2.6% in 2014, but for the first time since the credit crunch the UK’s prime regional markets marginally outperformed the capital with growth averaging 3.2%.
According to the latest analysis from Savills, 2014 was a year of two halves for the prime London residential market. Prices rose by 4.9% on average in the first half of the year and fell by a net figure of 2.2% in the second half, its prime London index shows.
The firm says that the increased rates of stamp duty introduced by the Chancellor in his Autumn Statement resulted in an adjustment in values at the top end of the market, most notably in prime London and parts of its high value extended commuter belt. As a result, the average all prime London index where values average £2.6 million recorded a 2.6% fall in the final quarter of 2014.
However, London’s prime markets up to £1 million and in the £1 million to £2 million range were less adversely affected by the stamp duty changes and would also be less affected by opposition proposals for a mansion tax. As a result, they saw annual price growth of 6% and 2.5% respectively.
The greatest impact of the stamp duty increase was seen in the most valuable markets of prime central London, which have seen the strongest price growth in recent years. In these central markets, where prices average £4 million, values fell by 4.2% in the last quarter of the year, contributing to small falls of 1.3% year on year.
‘It will take time for the effect of the stamp duty changes on prices to become clear, early signs are that the additional cost is predominantly being borne by sellers through price adjustments at a level similar to the extra stamp duty,’ said Lucian Cook, Savills UK head of residential research.
‘Prices were easing before the Autumn Statement, so for the very top end of the market the stamp duty rise coincided with some of the froth coming off pricing earlier in the quarter. Our analysis suggests that even without the stamp duty changes, values were on track to soften by around 1% in this last quarter, in part due to general pre-election uncertainty around high value property taxation,’ he explained.
Early indications are that the prime markets outside London have been less impacted by the new stamp duty rates and would also be less affected by further taxation in the form of a mansion tax.
In the sub £1 million prime market across the UK, average prices rose by 4.6% in 2014, fuelled by particularly strong growth in the first six months of the year. These lower value prime markets, particularly those that are well-connected to London, are forecast to see the strongest growth over the next year and into the midterm, Savills says.
Higher value homes in the £2 million plus range recorded marginal 0.8% falls over 2014, as values fell by 3.1% in the last three months of the year.
Occupier demand, particularly in London, continues to be strong, though prime market rents have been slower to respond to economic recovery than capital values. In London, the two strongest performing markets have been prime central London, where rents rose by an average of 3.5% in 2014, and the markets of Canary Wharf and Wapping which rose by 5% in the year.
Average prime London rents ended the year up 1.8%, meaning that the market has finally nudged back above its peak preceding the Lehman Brothers collapse. Prime commuter zone rents rose by 2.7% in 2014.
Assuming no further tax increases in this election year, average prices across prime London are expected to stabilise with a fall of 0.5% in 2015 but grow by 22.7% in the next five years.
‘That means sellers of prime housing need to maintain a realistic view on values achievable in the election year, if they are committed to achieving a sale. Our evidence suggests that there is a market for appropriately priced stock,’ added Cook.
Strong occupier demand in London’s strengthening economy and the continued expansion of new technology sectors will underpin the prime rental markets and the Savills five year rental forecast anticipates growth of 17.1% and 15.9% for prime London and the prime commuter zone respectively.
Source: Property Wire
Press release ends.
ABOUT NEW FOREST, SANDBANKS, UK COUNTRY HOUSES AND ESTATES PROPERTY SEARCH AGENTS AND PROPERTY BUYING ADVISORS, SANDS HOME SEARCH
Sands Home Search are independent Property Search & Relocation Agents who specialise in finding and acquiring the finest property for sale in The New Forest, Sandbanks, the UK Country House market and in Cape Town South Africa for private, corporate and international property buying clients.
TEL: 01425 462 549
(from outside of the UK 0044 1425 462 549)
CORPORATE VIDEO: www.YouTube.com/User/PropertySearchAgents
Follow us on Facebook: www.FaceBook/pages/UK-Property-Search-Agents-Sands-Home-Search
TAGS: New Forest, Sandbanks, England, Property, Sale, Buy, Selling, Buying, Search, Homes, Houses, Country Homes, Property Search Agent, Relocation Agent, Property Buying Agent, Property Buying Advisor, Relocation Company, Property, Real Estate, Country Houses, Country Homes, Country Estates, Period Property, Equestrian Property, Farms, Waterside Homes, Town, City, Village, For Sale, Period Property, Rectories, City, Buying, Selling, Renting, Homes, Houses, Estate Agents, Property Search, House for sale, Property Prices, Property Market, Property Agents
(from outside of the UK 0044 1425 462 549)