New analysis suggests that property value growth in the prime central London market is due to be less than previously predicted, due to a slowdown within the sector.
Real estate firm Knight Frank has made revisions to its 2016 forecast for yearly price growth in the region, lowering their increase suggestions from 4.5% to just 2%.
The firm noted that the prime London property market has experienced a number of challenges during 2015, from the proposed mansion tax and increases in stamp duty. As a result, annual property price growth has dropped from 5% at the end of 2014 to 1.3% in September.
‘These challenges have been led by the increase in stamp duty at the end of 2014, a factor that will continue to weigh on transactions and price growth into 2016 as the market absorbs the new rates,’ the report states.
In addition, the report shows that worldwide economic uncertainty, particularly in China, has also had a negative effect on housing demand. However, it also says, ‘the strength of the UK’s economic recovery, employment growth in London and the likelihood of continued low interest rates mean price growth will remain positive next year.’
Price growth in PCL market predicted to fall
Additionally, the report points out that activity during September and October has risen followed a few subdued summer months. With this said, the report also shows that buyers have become more circumspect in their requirements, due to the changes in stamp duty.
This has,’ resulted in a flight to quality, meaning demand is particularly strong for properties in the best condition and on a prime floor, street or square,’ according to the investigation.
‘While the anticipated gear change materialised as summer moved in Autumn, there has been no sense the market is entering full-blown recovery mode after what has been a subdued 2015,’ the report concludes.