The Central London residential market has suffered a stained fall now for 17 consecutive quarters dropping -19.84 % in Central Flats and -16.86% in Central Houses (source: Savills prime London Residential Statistical Supplement).
I have been working in the central London residential property market for nearly 40 years and I cannot recall anything like it. When there have been past corrections the market has recovered pretty quickly such as post the Lehman collapse in September 2008 – by the following March, the market was on the up again.
The villain of the piece is Stamp Duty | taxes – not Brexit although the latter is sitting over the market as a huge damp squib offering would be investors nothing other than a marvellous excuse to do nothing!
In effect property taxes are simply a manifestation of a secret political plan to drive out investors both local and foreign and push house prices down to make them more affordable to the people that matter politically – i.e. the electorate.
This week we saw a further relaxation on SDLT for first time buyers in Monday’s budget to help them get on the property ladder. However for someone to buy, someone else needs to sell and on the logical assumption that the seller at the lower end will be wanting to trade up, sooner or later this | subsequent seller will hit the SDLT ‘ceiling’ where they will find it very hard to trade up any higher as:
a) they will suffer a far higher percentage hit on SDLT the moment they get to the middle market average terraced house £1.5m- £2m bracket as:
b) existing house owners in this middle market bracket now think very hard about selling at all preferring to hold | extend their houses to avoid the massive Stamp Duty transaction costs involved. In effect missing out one or two moves that a healthy low transaction cost market would encourage.
Thankfully SDLT was not increased in Monday’s budget on foreign buyers – a mainstay of the central London market – although this no doubt will come about after further consultation.