Uncertainties in the global economic outlook combined with recent changes to tax rules are unsettling the London housing market, says agents in the capital, adding, however, that the weakening Pound should make it more attractive to foreign investors.
According to research firm LonRes, the volume of transactions in Knightsbridge & Belgravia is down by 28 per cent since this time last year, prices have fallen by 2.1 per cent and the average price achieved per square foot is £1,972. Faring best in the Prime Central London (PCL) market is Chelsea, with turnover down 11 per cent and values barely changing year-on-year, with price increases of 0.4 per cent. The average price per square foot achieved being £1,680 across all properties in this borough.
Meanwhile, agents are detecting the effects of the extra 3 per cent stamp duty levied on second home or buy-to-let purchases, which came into effect this month. “Buyers are being cautious with many taking the view that they will be able to negotiate at least that extra 3 per cent off the asking price once 1st April has passed,” commented PCL agency Kaye &Carey. “Sellers, enjoying low interest rates, are under no pressure to sell and, for the most part, are reluctant to recognise that their homes today are not worth as much as they were last Autumn.”
On the flip side, the same agency reports a recent hike in rental enquiries, in particular around Chelsea and Knightsbridge. “While the market is price sensitive, most tenants are paying close to asking rental for something they really like,” they said. “They are totally aware of the competition for the best properties where supply is tight. Paying the rent in advance, either 6 months or annually, has become more prevalent amongst tenants – perhaps knowing that they will stay longer now there is no urgency to buy. For some, it can simply be for the convenience, for others it offers them the best chance of securing the property they want!”