Global property investors are still attracted to prime property in London, despite the monthly fall in prices, according to the Land Registry, but talk of ‘mansion tax’ is off-putting, says a leading agent
UK house prices fell 0.2% in September, the biggest drop in almost a year, and by 0.7% in London, official new figures show.
Home prices are up 7.2% year-on-year, which is 1.2% lower than in August and the first annual fall since May 2013.
But sales of £1million-plus homes in England and Wales rose in the year to July 2014 by 19% to 1,439 from 1,207.
The biggest year-on-year price increase for all property prices came in London at 18.4%, but its 0.7% monthly decline was one of the largest. Average property prices in the capital are now at £460,521.
Peter Rollings, Chief Executive Office of leading London agent Marsh & Parsons, says the city is still a leading target for real estate investors and the average price of a prime property has risen £163,973 in the last year.
“House prices rises are flattening on a monthly basis, as growth relaxes after a rousing first half of the year. But considered as a whole, the UK property market is still on an upward trajectory and prices have seen a considerable uplift in the past year.
“London is still showing healthy annual growth, and the unparalleled draw of living or investing in what many regards as the world’s greatest city gave the property market here a shortcut in the recovery. As a result, the average price of a Prime London home has risen by £163,973 over the past year.”
However, ‘mansion tax’ proposals are likely to deter overseas buyers, he believes.
“London’s economy thrives on its global standing as an unbeatable destination both to live and to do business, and talk of a ‘mansion tax’ and other populist wealth taxes threatens to erode this reputation.
“A quarter of all prime London property purchases are made by overseas and foreign nationality buyers, though the vast majority have chosen to live and work here, adding hugely to the strength and vibrancy of the London economy. The uncertainty surrounding these proposals could shake the foundations of London’s property market as the political rhetoric picks up ahead of May’s general election, and we’d enter dangerous territory, which could filter down to all sections of the market if these buyers packed up and turned their attentions elsewhere.”
Only three regions saw price rises over the month, led by The East at 1.4%, followed by the South West at 0.7% and Wales at 0.4%, according to the Land Registry data.
With prices down 2.2% in the last month, Yorkshire & The Humber saw the biggest fall and had the lowest annual price growth of just 1.4%.
The Midlands also suffered, with monthly values down 1.3% in the West Midlands, taking annual growth to 4.3%, and 0.8% in the East Midlands, with annual growth at 6%.
Most market experts agree that UK house price growth is slowing, but Land Registry are particularly significant because they are based on sales and include property bought for cash.
In July 2014, completed house sales in England & Wales rose 7% to 79,214 compared with 73,749 in July 2013.
There were 863 repossessions in England & Wales during July 2014, which is one-third lower than the 1,283 from July 2013. The East had the greatest fall in repossession sales.
By Adrian Bishop, Editor, OPP Connect