New Report Shows Weaker Demand In London’s Prime Property Market
Residential data firm Hometrack recently reported a decrease in London’s prime property prices in the last 3 months of 2014.
Changes in taxes and the relative value of exchange rate have weakened the demand from overseas buyers and prime central London properties saw their prices fall by 4.3%.
Capital values of prime central London properties have risen by 80% in the last five years.
A 17% decrease of property prices in the period between 2007 and 2009, together with the drop in the value of sterling had contributed to make London very appealing to overseas buyers. In 2009 and 2010 the demand was in fact extremely high. In the last six months, Russian buyers in particular have experienced the biggest gains thanks to the weakness in the ruble.
However, buying in London now looks much more expensive to Russian buyers who do not already own a property in the capital. Yet, this was not the only cause of the drop in demand and pricing levels of London prime properties in the last three months of 2014. Changes in UK stamp duty levels have indeed caused an increase in property tax for foreign buyers. On top of this, the market was also affected by the hype around a mansion tax to be introduced after the general elections in May 2015.
Yet, Hometrack’s report also showed that prime properties in London have seen a much faster increase in their prices in the last five years, compared to any other sector of the housing market within the London area. Prime London’s properties have registered an 80% increase, against a 59% of the London region and a 34% in the whole UK.
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