Savills said the prices of major homes in central London were the lowest in a decade due to last year’s tax changes.
The property agent said the annual value fell by 2.6% as of the end of March, “mainly in response to changes introduced in the fall budget,” the business forecasts a further decline this year.
It added: “This means that the main London property is 21.2% lower than its peak in June 2014 – saving £1.2 million of London’s main property, currently worth £4.6 million.”
“The abolition of non-bond tax system and the additional stamp duty surcharges are imposed on other homes,” said Lucian Cook, head of residential research at Sawells.
“However, the scale of these price declines is limited by several factors, including the value already provided by the budget.
“Compared with the market’s previous peak, prices were similar to those that appeared last in 2009 and 1992, when values fell by 25% and 22%, respectively.”
Labour has accelerated plans for the former Conservative government, which plans to phase out the non-DOMS tax system by 2029.
And in October Budget Secretary Rachel Reeves increased the stamp duty surcharge for the second home from 3% to 5%.
“But, while some owners become non-residents for tax purposes, we don’t see a lot of stocks listed,” Cook said.
“Our clients are often keen to maintain a foundation in London, especially given the context of global geopolitical uncertainty.
“So we expect prices in central London to be lower this year, with prices expected to be re-adjusted by the end of 2025, with most waterfalls expected to take place in the first half of this year.”
Notting Hill is unified and is the only major region in central London to fall as of March, “because it also benefits from strong domestic demand.”
By comparison, the strongest part of the London market was in Hackney, which grew 4.9% during this period, while Putney, Wimbledon and Islington all rose 3%.
“The demand for domestic buyers is backed by the rate cuts that have occurred, but the prospect of lower debt costs later this year does not offer much urgency among potential buyers,” Cook said.
