Prices of the best homes in prime central London ended the year 7.5 percent higher year-on-year, having recorded a 0.8 percent rise in December, according to research from Knight Frank.
The monthly rise was the highest since March and ended a ten-month slowing in the rate of annual growth, which had fallen to 6.9 percent during November.
Interestingly last year’s prime property price growth was the lowest in three years.
Reviewing the year-end position reveals investors would certainly have had more cause for celebration if they’d bought prime central London property rather than the safe-haven asset of gold at the start of 2013.
By the middle of December, gold prices had fallen by about a quarter since the start of 2013 as investors ventured back to the stock market and the U.S. Federal Reserve began dropping hints it may wind down its economic stimulus programme.
But December was also the month Chancellor George Osborne announced that overseas buyers will pay capital gains tax on residential property from 2015.
Knight Frank predicted that, on its own, the move is unlikely to put much of a dent in the prime central London market as tax is not the overriding concern for overseas buyers in London. But it is indicative of wider regulatory uncertainty, including the succession of recent tax changes, which has unsettled some buyers and tempered growth.
The 2013 annual rate of increase was lower than the 8.7 percent recorded last year and the rise of 12.1 percent in 2011, and Knight Frank is forecasting a further slowing to 4% next year.
In particular, growth slowed in established markets like Mayfair, Knightsbridge and Chelsea and a division between prime central London’s traditional heartland and the rest of the prime London market became clearer.
Prices in Chelsea rose 2.7% while growth was 5.8 percent in Mayfair and 6.7 percent in Knightsbridge, meaning all three areas ended the year by underperforming the wider prime central London average for the first time in ten years.
Meanwhile, there was double digit price growth in areas like City & Fringe (15.7 percent), Islington (11.8 percent) and Marylebone (12.3 percent).
Such rises, which by mid-December exceeded that of the FTSE100 index, were helped by stock levels in the sub-£2million category that were 37 percent lower than at the same point in 2012.
Low mortgage rates means owners can afford to play a game of wait-and-see rather than sell while new buyer registrations rose by a third.
This article was written by Andrew Batt, International Group
Editor of PropertyGuru Group. To contact him about this or other stories
email andrew@propertyguru.com.sg
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