Priciest property in central London sees dip in sales due to tax concerns
Sales of properties in central London under £2 million remain strong with demand from overseas investors continuing but sales of pricier properties worth over £5 million are falling. Interest in the upper end of the market has waned due to mansion tax fears, according to the June prime central London property market report from agents W.A. Ellis.
It also says there has been an increase in rental stock availability and the average time for properties being marketed and let has increased from nine to 11 weeks year on year. ‘The sub £2 million market remains strong and we have agreed an encouraging number of sales in recent weeks. Two developments we’re marketing in Picton Place W1 and Jermyn Street SW1 are selling particularly well and have attracted strong international interest from buyers in Singapore, Hong Kong, China and India, indicating a strong appetite from foreign buyers in the investment market,’ said Richard Barber, partner in residential sales at W.A. Ellis.
He said that the firm has recently exchanged on a refurbished house in Moore Street that achieved in excess of £2,300 per square foot, and another unmodernised property in Moore Street that we sensibly priced at £2,165 per square foot, with potential to extend further subject to consent, that has achieved a number of strong bids as a result. However, he added that it is apparent that there are too many properties currently being marketed at over ambitious asking prices, and realistic pricing remains as important as ever. The firm recently commissioned a survey of house prices within Belgravia, Chelsea, South Kensington, Knightsbridge, and Kensington which showed there were 86 house sales from January to the end of June selling at an average value per square foot of £1,922.
Quote from PropertyCommunity.com : “A rising demand for rental properties in the UK, especially in London, is likely to continue for some time with the main threat to the sector the rise of assisted mortgage schemes”
However, activity at the upper end of the market has quietened due to a decrease in foreign interest. ‘This is partly due to apprehension regarding the 2015 election, with the belief that if a Labour government was elected they would eventually introduce a mansion tax,’ explained Barber. ‘As is common for this time of year, we will undoubtedly see some clients withdraw property from the open market as they will not wish their properties to linger on portals and websites over the quieter summer months. Approximately 25% of our current stock is being sold off market, so it is wise to register with an estate agent to see which properties are being quietly marketed and not visible online,’ he added.
Lucy Morton, senior partner and head of lettings at W.A. Ellis, said the firm is noticing increased supply in lettings, and provided properties are presented in first class condition, they continue to let at premium rents. In the first quarter of 2013, there were over 26% more properties available to let than in the same quarter in 2012. Rental stock has increased by 32% for properties under £1,000 per week, by 12% between £1,000 and £2,000 per week and by 8% over £2,000 per week.
‘City job losses have had an impact on demand for rental properties, and there is a threat of a further 12,500 job cuts over 2013, taking the total number lost since 2007 to circa 118,000. Just 12 months ago, severely restricted supply meant that properties were letting quickly and void periods were reduced. However, the average time between properties being marketed and let has increased to 11 weeks from nine weeks at the same time last year,’ she pointed out.
‘We are beginning to see the high net worth students coming to London, particularly from the Middle East, but they will return home for Ramadan in early July until August when we expect them to escape the high temperatures and return to our capital again. We anticipate that these students will reduce the high stock levels in the one and two bedroom area of the market,’ she added.