Higher taxes and political and economic uncertainty have continued to suppress prime London residential values throughout 2016. However, as prices have become more aligned with buyer expectations of value, the market has become more fluid.
Average house prices across all prime London fell by -2.2% in the final three months of 2016, leaving values down -5.8% since their peak in 2014 just before the shock stamp duty increases in the Autumn Statement and subsequent announcement of a 3% surcharge on additional homes effective from April 1st 2016.
The highest value markets of prime central London continue to be most impacted by the stamp duty effect, with prices down by an average of -6.9% year on year. This leaves prices down -12.5% in total since their June 2014 peak.
By contrast, in outer prime London, where the average value is just below £2 million, prices fell -2.3% over the fourth quarter of 2016 and are now -4.6% down from their peak in September 2015. Interest rates staying lower for longer, preserving affordability for those with a mortgage, has meant the outer prime London markets have held up more strongly against increased transaction costs than the prime central London market, which peaked over a year earlier in June 2014.
Source : Savills