Prime central London property prices are still on the rise, according to a new report, but the rate at which they are increasing is continuing at a slower than normal pace thanks to the continued effect of the stamp duty changes.
In December of last year, the government change the rules on stamp duty, with chancellor George Osborne stating that this would see 98 per cent of home buyers paying less for their purchase than they have in the past.
However, much of the remaining two per cent represented a large proportion of homes in prime central London, and the fact that people have had to pay more in tax when purchasing these homes has cooled demand, even if only a little.
While some areas to the west side of the city have, according to the latest report from Knight Frank, seen prices decline by as much as three per cent in the last year as a result, in prime central London as a whole, all that has happened is that there has been a slowing in the pace of growth.
This means there is still plenty to be positive about at the moment when it comes to the market in this area. Knight Frank said that as of the end of September, the year on year rate of price growth had climbed to as much as 1.3 per cent.
One interesting statistic from the company showed that while there are now fewer people looking at homes, what has really fallen has been the number of speculative potential buyers, many of whom would never have purchased the homes they were enquiring about. Serious buyers who set out with an intention to purchase are still doing so.
The report showed that while the average number of prospective buyers in the prime central London market fell by 34 per cent in the last year, the volume of actual viewings carried out only dropped by four per cent, showing that in reality, the number of buyers has actually stayed reasonably steady.
Tom Bill, head of London residential research at Knight Frank, said that the main change we've seen in prime central London in the past year has been towards a desire for quality. People who are having to pay more to secure a home in the more expensive parts of the capital are now far more inclined to make sure they are getting something of high standard.
"Activity has certainly increased following a subdued summer period as buyers came to terms with an increase in stamp duty and a July Budget that curbed exemptions surrounding resident non-doms," he added.
"Underlying demand remains strong but buyers have become more circumspect and stringent in their requirements due to the stamp duty increase. Demand is particularly strong for properties in the best condition and on a prime floor, street or square."