London: money magnet rollercoaster
At first glance, a figure north of six thousand London properties sold in the aforementioned range might not seem huge, but comparing it to sales of similar properties in 2009 – just 2,147 – gives some indication of just how dramatic London’s prime property boom has been.
The 2015 report further revealed the city’s attraction when it came to ultra-prime purchases: 1,638 luxury houses and apartments were sold for over $5 million compared to just 796 in Manhattan, 258 in Sydney and 21 in Los Angeles.
Boom to bust
But then the mansion tax imposed restrictions on second-home buyers and private investors, and the bidding wars came to a grinding halt. From July to September last year, sales of £1–£2 million properties dropped by more than 22.5% compared to the same period in 2014. Property sales above £5 million fell by 29% between January and October 2015.
Commentators also point to an increase in stamp duty to 12%, which is applied to properties valued at more than £1.5 million.
Admittedly, the ups and downs of the posh property market can seem like someone else’s problem, but what does it all mean for the rest of the London?
How the other half live
In short, it matters depending on where you live. By November 2015 the average property price in Kensington and Chelsea, Westminster, Camden, Hammersmith and Fulham had dropped 8.7% over the year as people shied away from higher stamp duty and investors looked outside of the city limits for a better return.
But such softness in the most expensive areas of London hasn’t had a large bearing on London’s affordability crisis. Outer boroughs are still seeing double-digit house price growth. The average house price in Newham, London’s poorest borough, is £401,945 (up 20.9% year-on-year), and first-time buyers are pushed further out as demand continues to outstrip supply.
Here at Keatons, we have our fingers firmly on the pulse of the London property market. If you’re looking to buy or sell in London, or you’d like to know more about current market conditions, please get in touch with us.