New research has revealed that despite a raft regulations and taxes hitting the central London market in recent years, the bottom 80% of the market has seen positive price growth.
Analysis of Land Registry data by London Central Portfolio has revealed that there has been positive growth in all sectors of the market since 2014’s high point – except the top 20%.
The leading factor impacting property performance in prime central London has been the stamp duty changes implemented at the end of 2014.
The Government scrapped the old slab structure and introduced a new banding system to help benefit anyone purchasing a home priced under £937,500. Those buying a home above this amount now face a bigger tax bill.
The research found that the bottom 40% of the market has recorded double digit price growth since the changes were introduced in 2014.
This represents all property under £936,000, the exact level (£937,000) where the graduated stamp duty sees an increase, rather than a decrease.
The bottom 10% of the market, where prices now average £388,688, has put in the strongest performance, recording 16% growth.
For these buyers, stamp duty has fallen with an average £2,227 saving. Price growth of properties above this up to £936,000, representing the bottom 10% – 40% of the market, has been 10%.
Naomi Heaton, CEO of LCP, said: “Despite reports of subdued prices for PCL as a whole, LCP’s analysis shows a positive picture in all sectors of the market since 2014’s high point, except the top 20%. This sector has been notably impacted by changes in Stamp Duty legislation. Indeed, the bottom 40% of the market has recorded double digit price growth, being far less affected by the recent introduction of taxes.
“As an ‘entry price’ market is also more accessible, remaining particularly attractive to international investors taking advantage of current currency exchange rate benefits which have resulted from Brexit, and continuing low interest rates.”
However, the tax increases since 2014 have had a far more damaging impact on properties in the luxury end of the market.
Properties in the 80% – 90% bracket, where prices average £2.8 million, have seen no price growth over the period.
In the top 10% of the market, where prices average £6.5 million, the picture is even bleaker. In this section of the market where stamp duty has doubled on average, prices now stand 8% lower than before.
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