Two reports produced by Savills suggests continuing struggles for high-priced properties in prime locations to combat economic uncertainty and the deterrent effects of stamp duty.
In prime country markets, the agency reports that annual growth slowed to 1.8 per cent by the end of last year – with growth of just 0.1 per cent between October and December.
“This reflects caution on the part of buyers regarding the outcome of the EU referendum and subsequent economic uncertainty, as well as the effects of stamp duty on higher value properties” says the agency’s most recent report on the sector.
Properties worth over £2m experienced small price falls over 2016, although demand was boosted by overseas buyers cashing in on the slump in Sterling’s value in the months following the referendum.
“Lower value stock has performed slightly better but still experienced only marginal annual growth. Likewise, lower value markets slightly further from London have fared better than their closer counterparts, with the strongest annual growth seen in the outer commute – areas typically 30–60 minutes travel time from the capital” notes the agency.
Its report on prime London is more downbeat.
Average house prices across all prime parts of the capital fell an average of 2.2 per cent in the final quarter of 2016, leaving values down 5.8 per cent since their peak in late 2014, before the then-Cameron government reformed stamp duty thresholds.
Savills says 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 per cent year on year for the highest priced properties.
This leaves their prices down 12.5 per cent in total since their June 2014 peak.
However, Savills says that in what it calls ‘outer prime London’, where the average value is just below £2m, prices fell 2.3 per cent over the fourth quarter of 2016 and are now a more modest 4.6 per cent down from their peak in September 2015.
One ray of light is that while transactions were down in late spring and summer – following the surge in activity ahead of the April 1 stamp duty surcharge deadline – reduced asking prices and international interest boosted transactions towards the end of 2016.