Could the London property bubble be showing its first signs of deflating? Estate agent Savills is forecasting the first price crop in prime central London property in more than half a decade.
Savills is predicting a 1% drop next year in the property priced in the top 5-15% of the market in central London. Prices for this prime central market have been growing since March 2009.
The foreign investors who have been helping to drive prices up are now being deterred by changes to stamp duty, the possibility of the mansion tax and other tax changes affecting foreign buyers and residents, Savills’ reports said.
“The market does face some short-term challenges which mean that growth is expected to slow across the prime London market over the next 18 months,” said Lucian Cook, head of residential research at Savills.
“The market has to contend with political rhetoric regarding the taxation of high-value property and ongoing background noise regarding a possible mansion tax, […] coming on top of successive tax changes including the non doms levy, increased stamp duty and the introduction of the annual tax on enveloped dwellings. Levels of prime new build stock coming to the market are also rising and high relative to occupational demand.”