Taylor Scott International News
Prime property prices in London fell by 4.3% in the last quarter of 2014 due to weaker demand from international buyers, a new analysis suggests. This weaker demand is driven by actual and potential tax changes as well as shifts in the relative value of the exchange rate, according to the report from residential data firm Hometrack. It points out that overseas buyers of prime central London property saw capital values rise by 80% over the last five years. The drop in the value of sterling between 2007and 2009, combined with a 17% fall in property prices made London look very good value to overseas buyers with extremely strong demand in 2009 and 2010. Changes in currencies have delivered even stronger gains, it explains. Russian buyers have seen the biggest gains on the weakness in the rouble in the last six months. However, rouble backed buyers who do not already own London property will now find it much more expensive to buy which looks set to impact demand and pricing levels with a drop in prime London prices in the last quarter of 2014. On top of this overseas buyers in this sector now face paying more in property tax due to changes announced at the end of last year to UK stamp duty levels. Talk of a mansion tax being introduced after May’s general election is also affecting the market. But the report also points out that prices in this sector have climbed much faster than other markets with the London region as a whole seeing prices rise by 59% in the last five years compared with prime London’s 80% and the UK as a whole just 34%. ‘While prime London property prices have grown by 80% in the last six years, changes in currencies can boost the gains for overseas buyers,’ said Richard Donnell, director of research at Hometrack. ‘This is good news for those overseas buyers who already own property but it can make London look less affordable for those who do not own housing. Fluctuations in currencies together with tax changes and the threat of a mansion tax are cooling demand for prime London housing and values have started to slip back as result,’ he added. Taylor Scott International
Taylor Scott International, Taylor Scott
