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News: Cautious buyers cause prime London prices to slow

Fri, 03 Oct 14


House prices in both prime London and prime regional markets grew by an average of just 0.5 per cent in the third quarter of 2014, according to Savills.

The dip has been attributed by the international adviser to the caution first seen in early 2014 spreading from central London to markets in other more domestic prime locations.

"Despite an improving domestic economy, the effect of the higher rates of stamp duty introduced in 2012 is still being felt particularly around the £2 million mark and was compounded over the summer months by the Scottish referendum and ongoing discussions around a mansion tax," says Lucian Cook, Savills UK head of residential research.

The figures follow reports from Home.co.uk that prime London property prices are starting to fall following a strong period of growth. Average sales prices fell in six of the UK’s 10 most expensive areas in September 2014, all of them being located in Central London, said the site.

Indeed, annual price growth in the traditional prime markets of Chelsea, Belgravia and Knightsbridge averaged just 3.3 per cent in the three months to September 2014, having flat-lined in the previous three months. Less expensive prime markets, such as Notting Hill and Kensington, showed quarterly price growth slightly in excess of 1 per cent in the quarter, taking year on year growth to 10 per cent.

Elsewhere, though, prices were "all buy static", with prices in the South West markets edging up 0.1 per cent in the quarter.

"These affluent domestic markets were the star performers of 2013, with 14.0 per cent growth, but now look fully valued to buyers who are constrained by more stringent mortgage lending criteria and looming interest rate rises," adds Cook.

"Instead, it is the markets of Islington, Canary Wharf and Wapping that have proved the most resilient, having seen double digit price growth in the first nine months of this year despite a slowing in the traditionally quieter summer period."

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