HAS THE PRIME CENTRAL LONDON MARKET PEAKED?
The signs are that it has – the increase in Stamp Duty Land Tax instigated by Chancellor George Osborne in December has almost certainly put a dampener on the market and, with more stock coming available, pressure on house prices is easing.
Whereas the PCL market up to £2million was very strong in the first half of the year, this sector of the market has cooled off and sellers must be realistic and prepared to accept lower offers. Similarly, the top end of the market from £6million upwards has been hard hit and prices really need to come down by 10% or so to absorb the stamp duty increase. It is easy to see why this sector has suffered, up until 4th December SDLT on a £10million property was £700,000 and that was plenty. It is now £1,113,750 - a ridiculous amount of money to pay for what is effectively a rubber stamping exercise at Land Registry.
Overseas buyers still account for approximately 45% of our transactions in London but many do so as a discretionary purchase with no particular urgency and, in a softening market, will often wait until they feel the time is right to re-enter the market or simply look elsewhere to invest.
It is not all gloom and doom - we still have strong demand from buyers looking to spend £3million to £6million on apartments around Kensington and Chelsea’s smartest garden squares.
They are mostly sophisticated English and Western European buyers attracted to London because of its culture and excellent schools. They like homes with good quality kitchens and bathrooms, and rooms having character features such as high corniced ceilings and fireplaces. They are not looking for bling, so schemes like One Hyde Park simply do not appeal – especially at prices representing £6,000 or more per square foot.
Three to four bedroom flats, from 1,500 to 3,000 sq ft, converted laterally across two buildings in prime garden squares are the most sought after and buyers will pay from £2,500 to £3,000 per square foot for the best floors of a building, but our research suggests that in the prime postcodes of SW1X, SW3 and SW7 there are only a dozen or so available.
Planners are keen to deny owners and developers the right to join two flats to create one larger one as this reduces housing stock so these highly prized lateral conversions are likely to become even more of a rarity and, consequently, hold their value best.
Houses of a similar size in the same areas, by contrast, represent better value as they have to be very good indeed to command much more than £2,200 per square foot.
Our outlook for the next six months is that we will go through a period of adjustment with little or no increase in prices, except for the ‘best in class’. Provided there is nothing on the horizon to jeopardise the UK economy we anticipate that, by next Spring, the Prime Central London market will have largely absorbed the increase in Stamp Duty and we shall see a return to stability.
Based in Knightsbridge, Kaye & Carey is an independent Estate Agency founded by Matthew Kaye and Adam Carey who, together, have over fifty years of experience across the Prime Central London market and remain firmly at the helm of this progressive company.
They are especially focused on the sale, acquisition and letting of properties in the Knightsbridge, South Kensington, Chelsea and Belgravia areas of London.