Sales may be rising overall in prime London areas but there are signs of a decline at the higher-end due to tax fears.
Chancellor Rachel Reeves hasn’t stood up in Parliament to deliver her first Budget yet, but it’s already having repercussions in the property market, Knight Frank warns.
While there was a 34% increase in the number of sales in London in July and August compared to the five-year average, there was a 16% decline above £2 million, data from the agency brand shows.
When you consider that £2m-plus sales accounted for 22% of the £11.7bnraised in stamp duty last year, it highlights the risk of tax rises – particularly on second home sales – having unintended consequences.
Supply looks set to rise this autumn, which will be driven in part by owners attempting to sell before any changes are introduced.
In an indication that more sellers are planning to list their property, the number of market valuation appraisals in August was 25% above the five-year average in London, Knight Frank data shows. Any future rise in supply would increase downwards pressure on prices.
Andrew Groocock, chief operating officer of Knight Frank’s estate agency business, said: “We are seeing a significant increase in market appraisals and listings from clients who have residential lettings portfolios.
“There is a feeling among many owners that they are better off bringing their properties to the market now and perhaps accepting a price that is 5%-10% lower, rather than running the risk of a CGT increase after the Budget.”
Average prices in prime central London (PCL) continued to edge down on a monthly basis in August, Knight Frank said.
A fall of 0.2% took the annual change to a 2.3% decline, which was the 16th month of negative territory.