Demand cools for prime central London
Analysis Hometrack reveals prime London values have started to fall on weaker demand driven by actual and potential tax changes coupled with shifts in the relative value of the exchange rate.
Richard Donnell, director of research at Hometrack, said: “While prime London property prices have grown by 80% in the last six years, changes in currencies can boost the gains for overseas buyers.
“This is good news for those overseas buyers who already own property but it can make London look less affordable for those who do not own housing.
“Fluctuations in currencies together with tax changes and the threat of a mansion tax are cooling demand for prime London housing and values have started to slip back as result.”
Overseas buyers of prime central London property saw capital values rise by 80% over the last five years.
The drop in the value of sterling between 2007and 2009, combined with a 17% fall in property prices made London look very good value to overseas buyers with extremely strong demand in 2009-2010.
Changes in currencies have delivered even stronger gains – Russian buyers have seen the biggest gains on the weakness in the rouble in the last six months.
However, rouble backed buyers who do not already own London property will now find it much more expensive to buy which looks set to impact demand and pricing levels with a drop in prime London prices in the last quarter of 2014.