London’s upmarket residential property prices saw a further increase in September, showing a 51% increase since the low points of March 2008. But tax modifications have affected some sector of the market, with the sales in the £2 million to £5 million segment falling 20% in the quarter to September compared with the same period last year.
According to Knight Frank index for September 2012, the average prime property values in central London now stand at a new record high, some 15% above the pre-property crisis peak of March 2008. Despite the impact of the March budget’s 40% rise in the top rate of stamp duty together, there has been a growth in prices, according to Liam Bailey, head of Knight Frank’s head of residential research.
Liam Bailey also stressed that new and undefined rules for an annual charge on £2 million plus properties held in certain ownership structures and the reform of non-resident capital gains tax rules are also in the offing.
“But the budget tax changes have had an undeniable impact on activity levels in the market, with the volume of sales in the £2 million to £5 million sector falling 20% in the three months to September compared to the same period in 2011″, said Bailey.
“Sales volumes above this bracket have been more robust, and there has also been a strong 23% rise in sales volumes for homes worth up to £2 million. The sub £2 million bracket is also where price growth has been strongest, with an annual increase of 11.6%,’ he added.
The index also indicates that despite weaker transaction volumes in the £2 million to £5 million bracket, the ratio of prospective buyers has proportionately matched with available properties across all price bands.