Sales of super prime property in the capital decreased during the final stages of 2015 with critics pointing the finger at the rise in stamp duty implemented in late 2014, writes property specialist Richard Carr.
Sales of £10million plus homes in London supposedly fell by a third during the final few months of last year as increased transaction fees put buyers off.
Knight Frank, international real estate firm, saw super prime transactions fall by 16% during the same period that stamp duty increases were implemented. For example, under the increased stamp duty regulations the transaction tax on a £10million property rose to £1.1million from £700,000, which equates to an additional 4% on top of the sale price.
Further changes will be made to the system in Spring when a further three percentage point increase will be put in place for buy to let properties and second homes.
With the stamp duty increase not being accounted for by sellers when putting properties onto the market, a standoff had occurred between them and buyers.
However, Knight Frank’s report would suggest that the market is beginning to absorb the 2014 changes with asking prices beginning to reflect the current state of the market.
With buyers keeping their cash in their pockets, sellers have become tired of the inaction and have started slowly knocking down asking prices to a more realistic level. It’s for this reason why there is cautious optimise looking ahead.
There were mixed fortunes for London’s different prime central London markets in 2015. Kensington and Mayfair continued their upwards trajectory in 2015 and both areas grew their super prime market share and Kensington was the largest super prime market in 2015.
The report also points out that the high quality of London’s super prime pipeline is evident in the growing share of new build deals done above £10 million, which has gone from a fifth in 2012 to over a third in 2015.