Homeowners and property investors in Greater London are facing steep falls in house prices as the slowdown in prime areas of the capital looks set to ripple out to other parts of the city, according to Portico.
The London estate agent points to the fact that the volume of transactions in the capital has almost halved over the past 12 months, owed in part to the recent introduction of the 3% stamp duty surcharge for property investors acquiring additional homes.
Top-end sales have stalled across prime central London, with transaction volume levels down 60% year-on-year, and yet the signs are that the market could cool further amid clouds of uncertainty ahead of the Brexit negotiations, while mortgage tax relief for buy-to-let investors is set to be phased out from April 2017.
Portico says that the central London property market is clearly beginning to ‘react’ to the drop of volumes, and has forecast a 6-7% decline in prices in prime central London which it believes ‘is likely to filter out to Greater London’.
“Unless action is taken to re-establish the natural movement of the whole market it’s likely this could be a serious issue and we will see prices fall,” said Mark Lawrinson, regional sales director at Portico.
But it is not all bad news for property investors, especially buy-to-let landlords. While Portico expect to see property prices fall, Lawrinson projects that rents will rise in 2017 which will “push up rental yields”.