The Political Calendar Shapes the prime London Market

The London Mayoral election and EU referendum are two events heightening a mood of short-term uncertainty, says Tom Bill

Additional findings:

  • Annual price growth in prime central London was 0.8 per cent in March, the lowest rate in more than six years as tax changes have an effect
  • The sub-£2 million market has performed more strongly in terms of price growth and transaction levels
  • The number of super-prime lettings transactions rose 29 per cent in the year to 31 March 2016 as stamp duty reform dampened demand in the sales market
  • Brent was the largest constituent in the optimum portfolio mix across London’s 32 boroughs over the last 20 years
  • Total returns in prime central and prime outer London outperformed a series of other asset class benchmarks

Tom Bill, Knight Frank’s head of London residential research, comments:

“Tax changes have resulted in a market that is trading more freely in lower price brackets. Transaction volumes have slowed more markedly above £2 million across London since the stamp duty reform of December2014, which increased the rate above £1.1 million.”

“Meanwhile, prices have declined by up to 7 per cent in higher-value neighbourhoods like Knightsbridge. While demand has slowed, there is an increasing sense that traction is returning as asking prices align with the expectations of buyers, a trend reinforced by a narrative of declining prices in the media.”

“As a result of this polarisation, Knight Frank forecasts a -2 per cent decline in western markets and 5 per cent growth in markets east of Mayfair and south of the River Thames in 2016.”