There was a marginal increase in the number of residential property sales in prime central London in the first half of this year, according to the latest figures.
Fresh data from LonRes, a research firm, shows that the volume of transactions in the heart of the capital rose 3% in the first half of 2017 compared with the corresponding period last year.
But across prime London and the prime surrounding areas sales were down 12% and 16% respectively, on an annual basis, following last year’s surge in buying activity ahead of the introduction of the 3% stamp duty surcharge in April 2016.
The now former chancellor George Osborne’s decision to reform stamp duty in December 2014, making the property acquisition tax more expensive for anyone acquiring property close to £1m and above, continues to have an adverse impact on home values in the capital’s prime areas, including a 4.4% price decline in prime central London in H1 2017, a 0.8% fall on prime London and by 2.5% drop in fringe areas.
The number of properties changing hands has also been impacted, as Londoners continue to be hit by high stamp duty levels compared to homebuyers in the rest of the country.
Despite the pickup in the number of homes changing hands in prime central London, a number of price-sensitive vendors have opted to withdraw their home from the market, or simply not list their property for sale at all, in cases where they are unlikely to achieve their bottom-line price.
Some 58% of properties taken off the market in central London so far this year were withdrawn rather than sold, according to data from LonRes, which is restricting supply for prospective purchasers.
“This gives you an idea of just how sluggish the market is,” said Marcus Dixon, head of research at LonRes. “There are large numbers of people in properties they would really rather sell.”
But the level of withdrawals is “an important barometer of the market”, according to Dixon, who points out that a lack of forced sellers have not been accompanied by a sharp deterioration in the economy, unlike during the 2008-09 crash.
“The housing market has slowed considerably but not a huge amount of people are losing their jobs or finding themselves unable to pay their mortgages,” he said.
“It creates a strange market in which lots of people are staying in properties that aren’t very suitable for them anymore.”