Central London’s housing market is showing a recovery from price falls which followed stamp duty changes in 2014 and 2016 according to an investment consultancy.
London Central Portfolio says the ‘mainstream’ central London sector, where units are priced under the top stamp duty band kicking in at around £935,000 and which largely represents buy to let property, has seen prices increase by 5.6 per cent from their peak reached before the stamp duty surcharge for additional properties came in to effect 18 months ago.
This brings average prices to 15.6 per cent above their high point three years ago, before the more fundamental stamp duty reforms introduced in December 2014.
The mainstream sector is now outperforming England and Wales which has seen growth of 7.1 per cent over the same period, says LCP, which has produced its data in conjunction with independent analytics firm Acadata.
The premium sector has also seen a bounce back, resulting in growth of 7.0 per cent over the last 12 months, although this is now tapering off.
Having been most impacted by increased taxation, prices in this sector still remains 3.3 per cent below their 2014 high.
“We have now seen signs of recovery as buyers absorb the additional cost of investing into a world class, safe haven asset class. Brexit jitters also appear to be calming down as global political and economic uncertainty makes the UK an attractive place to invest in once more” says Naomi Heaton, chief executive of London Central Portfolio.
“Whilst there may be further volatility to come, particularly with the Autumn Budget on November 22, these findings are certainly encouraging. However, the Chancellor should take heed of the delicate position of the market which has recorded a 10.3 per cent decrease in Stamp Duty tax take, according to HMRC’s latest report. More tax meddling may tip the scales back in the other direction” she warns.
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