Sales may be on the up in prime London areas, but the higher-end market is feeling the pinch due to looming tax hikes.
Chancellor Rachel Reeves hasn’t even delivered her first Budget yet, but the property market is already jittery, according to Knight Frank.
While overall sales in London saw a 34% increase in July and August compared to the five-year average, sales above £2 million dropped by 16%. This is particularly significant given that £2m-plus sales contributed 22% of the £11.7 billion raised in stamp duty last year. The fear of tax rises, especially on second homes, is creating ripples that could have unintended consequences.
Expect a surge in supply this autumn as owners rush to sell before any potential tax changes. Knight Frank data shows that market valuation appraisals in August were 25% above the five-year average in London. More supply could mean downward pressure on prices.
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Andrew Groocock, Chief Operating Officer of Knight Frank’s estate agency business, notes, “We are seeing a significant increase in market appraisals and listings from clients who have residential lettings portfolios. Many owners feel it’s better to sell now, even if it means accepting a price 5%-10% lower, rather than risk a CGT increase after the Budget.”
Average prices in prime central London (PCL) continued to edge down in August, with a 0.2% fall taking the annual change to a 2.3% decline. This marks the 16th consecutive month of negative territory.
So, while the market is buzzing with activity, the higher-end is treading cautiously, waiting to see what the Budget has in store. Will the tax fears materialise, or is this just a storm in a teacup? Only time will tell.
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