London property prices continue to outperform
According to HM Land Registry All Transaction Data, prices in the area rose 25% across the year to reach an average of £1,186,817. LCP said this price increase is equivalent to earning £122 an hour for a working week, 14 times the London Living Wage (£8.55).
Two years down the line from the 2011 Budget, headline results show a complete recovery from the rise in Stamp Duty from 4% to 5% for purchases above £1m. The bunching in sales under £1m, which occurred following the 2011 stamp duty increases, has now burst through and the £1m – £2m price band has seen a staggering increase in transactions of 84% since last March.
Furthermore, the number of transactions in the most susceptible sector (£1m – £1.5m) is finally back to where it stood in March 2011: 87 this month versus 88 in 2011.
“As investors have come to terms with the increased cost of moving, we are witnessing increased sales volumes at the top-end of the market,” said Naomi Heaton, CEO of London Central Portfolio.
“Whilst these figures are a result of Prime London Central’s continued global appeal, they also represent a bounce back from the reduction caused by property tax rises.
“Transactions in PLC should continue to pick up across the year once the last of the negative sentiment washes through and when tax carve-outs, announced in the Autumn Statement, come into force at Royal Assent of the Bill in July.”
LCP highlighted that the figures are slightly distorted as some buyers of the most expensive properties are now choosing to avoid George Osborne’s new property taxes by purchasing units in their own names rather than in an existing corporate structure. These transactions are now being lodged in HM Land Registry’s ATD where they did not appear before.
Without this behavioural change it is unlikely that we would have seen this month’s most expensive transaction entered at the registry: One Hyde Park, Flat A 06.1, at £29,350,000.
While London’s most famous new development saw the most expensive transaction, the cheapest purchase this month was £8,000 for a terraced house on Blaenau Gwent’s Beaufort Rise. A difference of £29,342,000 between the top and bottom end of the market.
Nevertheless the country as a whole has also seen increasing prices, influenced by a more positive sentiment in the housing market. According to Zoopla Property Group, confidence in the property market is at its highest level in three years.
Prices rose 5% across the year to reach £234,962 or, taking out the halo effect of PLC price appreciation, the average now stands at £224,737.