Top-end residential properties in Kensington and Chelsea and the City of Westminster (Prime Central London PCL) increased by 3.75 percent during 2016 despite the result of the Brexit referendum and the imposition of additional stamp duty on property transactions, according to analysis of data released by HM Land Registry by London Central Portfolio (LCP), a London-based specialist adviser.
Although average prices reached a new high of £1,818,262 the number of transactions fell by 29 percent on the previous year and at 3,300 was the lowest number of record said LCP.
Nonetheless, the situation recovered to some extent during the fourth quarter where both average prices and transaction numbers increased by 14 percent and 19 percent respectively over the previous quarter.
“Having taken a big knock following last April’s new additional rate stamp duty and the shock of Brexit, evidence of a recovery in PCL in Q4 is positive news,” said Naomi Heaton, LCP’s chief executive. “As an international buying market, the weakness in sterling, combined with the Trump-effect and increasing instability in Europe, appears to have drawn investors back to PCL as a safe haven asset class. The uptick has been led, in particular, by Kensington and Chelsea which experienced a 24 percent quarterly increase in prices.
“As with PCL prices, sales volumes saw a recovery at the end of 2016. Although transactions remain significantly down for the year as a whole, lower even than the depths of the credit crunch, Q4 reflected a 19 percent increase in sales compared with Q3, albeit from a very low base. This is notable, however, as it is bucks the seasonal trend where volumes typically tail-off in the quieter pre-Christmas period. It is our expectation that sales numbers will continue to harden gradually as the initial shock of Brexit and tax changes wash through."
The fall in transactions was even more marked in Greater London with the number falling by 29 percent in the fourth quarter compared to the year before. Although, at 5.7 percent, annual price growth was more positive average prices took a hit across the year, finishing 3 percent lower than in January at t £584,694.
In contrast, the picture for the UK’s domestic housing market is more bleak says LCP. According to HM Land Registry data transactions in England and Wales were down 17 percent in Q4 compared to the same period in 2015, with average prices increasing by just 2.1 percent over the previous year. This is far below the 6.6 percent long term average since 1996.