The London property market has been through the toughest changes in the past 12 months – a result of the unstable political and social climate and the repercussions of the Brexit vote. This turbulent backdrop is now beginning to manifest itself in changes to property prices in the most affluent areas.
Stamp duty changes rocked the central London housing market last year as buyers became less keen to fork out thousands of pounds in transaction taxes for homes worth over £1m.
Asking prices on high-end homes in London’s most affluent boroughs were slashed – some by as much as 30 per cent – as home-movers sought to shift their stock.
By January, house prices in Chelsea had fallen by 13 per cent, and in Kensington, prices were down by nearly 12 per cent.
Anthony Codling, analyst at Jefferies Bank, has predicted that Zone 1 prices will fall by 10 per cent on average this year, and that prices in Zone 2 will be flat.
“Uncertainty likely to remain in my view until will know what London looks like once Article 50 has played out,” he told City AM. “If the financial services sector moves to mainland Europe, minus 10 per cent may be optimistic, if London retains its current importance and global city status, minus 10 per cent may be overly pessimistic.”
Simon Rubinsohn, RICS chief economist, said tax changes have had a significant impact on central London prices, and that in the near-term, prices might “slip a bit more”.
But, over the next year the market will be more stable, he said, as much of the price correction has happened already.
“There are signs that perhaps there will be a more stable trend in prices. You’re not going to see prices shoot up though.”
Knight Frank’s research shows that central London house prices fell by seven per cent last year, and the estate agents have forecast that prices on prime homes in outer London will fall by 1.5 per cent. However, they expect west London prices to stay flat in 2017.
Meanwhile, the Guardian reports that more than half of the buyers of new homes have experienced major problems with their properties, according to research, which comes after Bovis Homes agreed to pay £7m compensation to customers for poorly built houses.
A YouGov survey for the housing charity Shelter found that 51% of homeowners of recent new builds in England said they had experienced major problems including issues with construction, unfinished fittings and faults with utilities.
The survey, which polled 4,341 UK adults online, was published alongside a Shelter report that concluded that the housebuilding sector is rigged in favour of big developers and land traders rather than families looking for homes.
In the report, titled New Civic Housebuilding, the charity calls for a return to building good-quality, affordable homes like the model villages for Cadbury workers at Bournville, the red brick developments of the Peabody and Guinness estates, the Victorian and Georgian terraces in Edinburgh and Bath, and the garden cities of Letchworth and Welwyn.