As the London property market has experienced a recent slow-down in sales there is belief that this could continue into autumn as both buyers and sellers take stock of recent changes in tax according to new analysis.
Annual growth has declined from 7.9% in July 2014 to 2% according to the most recent prime central London sales index from real estate company Knight Frank.
The total sales of property in both England and Wales dropped by 11% and the number of deals that were valued at more than £2 million in London has decreased by 25% during the first quarter of 2015.
Analysing the figures has shown that the growth in price up to July 2015 was the largest in the City and Fringe where growth sat at 6.6% with Islington sitting at 5.8%, Mayfair at 3.6%, Southbank at 3.4% and Marylebone at 3.2%.
There was an increase in prices in South Kensington of 1.9% whilst St Johns Wood experienced a growth of 1.5% with Hyde Park and Belgravia seeing growth of 1.2% and 1% respectively. In Notting Hill, Knightsbridge, Chelsea and Kensington there was a decrease in growth.
Buyers are no longer moving as quick as they once were to make decisions on property in London and between the General election and the summer holidays things have become a lot slower.
A number of tax changes have reduced annual growth to a single figure which means that both buyers and sellers are prepared to wait until later this year as they are not concerned on missing out on an improvement in growth.
Those buyers who are more flexible are willing to wait until they understand how the policy changes will be handled. In the short term there is some degree of hesitation surrounding recent changes to non-dom legislation but the biggest cause of the decline is the rise in stamp duty as buyers are still coming to terms with the reforms.
Even though the underlying economy is strong, the tax changes that have been implemented have had a large impact on the market in London which means that it is going to take a short period of time for things to readjust.
The rise in stamps duty last December affected those properties worth over £1.1 million and it has played a part in the decrease in activity in the market. Throughout England and Wales, London made up 13% of transactions during the first quarter of this year and it created almost 47% stamp duty revenue which is an increase of almost 4% from 43.4% during the same period last year whilst the old stamp duty system was in place.
Those properties that are valued over £1 million in London made up only 1% of the deals in England and Wales but revenue increase to 24.8% rising from 19.8% last year. Stamp duty dropped during the first quarter but the government had predicted this but house price inflation is expected to help close up the gap.
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