New data from LonRes has shown that in the second quarter of this year transactions across prime London have gone down 22.7% on the same period last year and that prices on a £-per-square-foot basis have gone down to 0.9%.
The period under review included the final five weeks of the general election campaign, when the possibility of a mansion tax was present and because of this the properties in the £1m to £2m band were particularly badly hit.
William Carrington chairman at LonRes believes that the stamp duty changes introduced at the end of 2014 are the main cause saying “For many people living in London the cost of moving has become prohibitively high with the consequence that would-be sellers are choosing to stay put. This, in turn is putting pressure on supply at a time when the market copes with a decline in transactions – currently over 20% year-on-year”.
LonRes say that agents have reported the decreasing levels of applicants over the second quarter of 2015, with demand from overseas buyers weakening.
In contrast 40% of agents have seen an increase in demand from UK purchasers over the last three months compared to just 14% who have seen a drop. There has also been a rise in purchases for owner-occupation compared to earlier months, with a fall in the proportion of sales to investors.
William Carrington was hoping for the business-friendly Conservative government to give a boost of energy to the market, however “the pre and post-election hype had no bounce.”
William Carrington says London’s market will face more uncertainty caused by the prime minister’s promise to have an in/out referendum on Europe and nervousness about whether the Greek problems over the Euro “will spread as a contagion.”