Taylor Scott International News
Country locations are set to outperform London as the prime property markets enter the next stage of the housing cycle, according to a new analysis report. Stamp duty changes introduced in the 2014 autumn Statement have had a bigger impact than many forecast, the effect initially being masked by the uncertainty in the run up to the General Election, according to the report from property firm Savills. However, it points out that both the prime housing markets of London and the country have reacted relatively rationally to the changes. Indeed, small price falls were recorded in the higher value markets where the stamp duty liability has increased but by contrast, in the lower value prime markets where there is now a tax saving, values have continued to rise, albeit at a slower rate than in 2014. The challenges faced by the prime markets of late are reflected by the fact that the total value of housing stock in Kensington and Chelsea fell in 2015, though the loss of £693 million is dwarfed by the gains of £68 billion over the preceding 10 years, the report explains. Transaction levels, though undoubtedly lower than in 2014, have not collapsed as some would argue. Figures from the Land Registry indicate a 5 to 10% fall above £1 million across England and Wales. ‘While this suggests there is still a market for appropriately priced stock, it also means we are unlikely to see cuts to rates of stamp duty at the top end,’ said Sophie chick of Savills research team. ‘Indeed, in the 2015 autumn Statement, more stamp duty changes were announced for buyers of additional homes (second homes and buy to let) causing further small price falls in markets with high concentrations of such buyers in the last quarter of last year,’ she explained. Chick pointed out that to understand what lies ahead it is helpful to look back and identify what happened between 2002 and 2005 when the market was at a similar stage in the housing cycle. ‘In prime London, over the three and a half year period from June 2002, prices increased by just 5%. Currently, average values have seen no net growth since the first quarter of 2014, so if the market follows a similar trend we would expect prime London values to remain broadly flat through 2016 and most of 2017,’ she said. ‘Over the same period, prices in the prime country markets outperformed London with an average increase of 17%. We expect a similar trend this time round as the ripple effect took hold and more equity flows to the housing markets beyond London,’ she explained. The analysis shows that in terms of how residential value is concentrated, Kensington and Chelsea sits far ahead of any other borough or local authority across the UK, not just by virtue of high property prices but also the relative density of housing in the borough. The combination of the two means that on average in… Taylor Scott International
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