Home values in the Hyde Park district fell 14 per cent in the 12 months through January, the biggest drop in central London’s best neighbourhoods, as sellers cut their asking prices in the wake of the Brexit vote.
Values dropped by an average of 6.7 per cent across the capital’s best districts as successive sales-tax increases damped demand, Knight Frank said in a report on Monday. The lower prices are luring buyers back into the market, with sales increasing in the final quarter of 2016, the broker said.
The Chelsea neighbourhood saw a price drop of 13.3 per cent, the second most among the districts Knight Frank defines as prime central London. Kensington was next with a drop of 11.9 per cent.
More owners are accepting the need for discount to make up for the higher transaction costs that buyers face, narrowing the gap with what purchasers are willing to pay, Tom Bill, head of London residential research at Knight Frank, wrote in the report. “In some instances the EU referendum was the catalyst for overdue price reductions.”
A 3 per cent levy on second-home purchasers and landlords, introduced in April 2016, followed an increase in charges for all luxury-home buyers in December 2014. The stamp duty for a £7.5m residence to be used as a second home is now more than £1m.
Knight Frank exchanged contracts on the most London luxury homes in January for three years, as the number of prospective buyers increased 14 per cent in the final quarter compared to a year earlier, the report said. The gap between asking prices and achieved prices grew to 10 percent in 2016, according to data compiled by researcher LonRes.
Luxury London home prices reached a low of at least 22 months in September and are now 6.9 percent below the November 2014 peak, LonRes data show. The average price per square foot is now £1,787 , which equates to about £1.8m based on average home sizes according to the English Housing Survey, published in Feb. 2016.
