Sales of properties over £2 million slowing and dropping in price
In the first 3 months of 2016 sales of property spiked as buyers rushed to beat new stamp duty and tax rules and new data from luxury Estate Agents Frank Knight is supporting this.
It is expected that the second quarter of 2016 will be dampened as the market settles under the new rules. The prime property market has been the most effected which has the biggest impact from stamp duty changes.
In a new report from Tom Bill, Head of London Residential Research at luxury estate agent Knight Frank has found buyers of properties over £1.1m are taking longer to make decisions on buying property and are the most price sensitive. He states
“The longer-term result of higher rates of stamp duty, including the reform of December 2014 that increased the rate for properties worth more than £1.1 million, is that buyers have become more price-sensitive.
Indeed, higher transaction costs are producing similar distortions in the prime London property market as they do with other assets including stocks and bonds.
Average holding periods increase, trading volumes decline, prices adjust to some degree and there is a stronger demand for ‘best-in-class’ assets that can be traded more easily.
In this new environment, vendors are typically lowering asking prices by 10% or more and buyers have become more hesitant. While the number of viewings in the first three months of the year increased by 25%, the number of new prospective buyers declined 10%, indicating buyers are taking longer before making an offer.”
However properties under £1 million are still showing strong growth in London.