London property prices are booming and despite fears of a housing crash in the capital, the market is still healthy. However, new statistics suggest that the prime central London sales market had a slightly slower year in 2015. Expensive properties that exceed £1 million decreased at the end of last year, while houses that have a value of more than £5 million saw an even bigger drop. Here are a couple of facts you need to know about the London market:
1. Expensive properties in London fell for the first time in years during 2015. Some stats illustrate the current climate of the London housing market. According to LonRes, prices fell by -0.4 percent during the fourth quarter of 2015. Although homes that sold for less than £1 million continued to soar, rising a hefty 7.8 percent during the course of a year, there were concerns about whether London’s property boom was beginning to show signs of fatigue. The most expensive properties in London (those which have a value of at least £5 million) fell even further, decreasing by -8.6 percent during the year. Meanwhile, there were fewer transactions recorded in the final three months of 2015 than the same period in 2014.
2. Market conditions and the value of sterling had an effect on property prices in the capital. Duty reform at the end of 2014 saw the cost of property in the upper thresholds skyrocket, which affected demand for houses in the capital. This, alongside other price increases in the economy and the value of pound sterling, saw the London housing market slump for the first time in years. When the Conservative government was elected in May 2015, things looked bright; plans for a mansion tax – one of Labour’s policies – were quickly forgotten when David Cameron won a majority in the House of Commons. However, prices in some parts of the capital stalled, leading some to question the future of the housing market. Other political factors could come into play that could influence the future of the property market in London. The EU referendum, which takes place next month, could lead to a “see-saw” effect, according to some housing experts which could weaken prices further.
It’s not all doom and gloom though – properties in the capital still have a higher price tag than anywhere else in the United Kingdom, and as foreign investors continue to buy property in the Big Smoke, homeowners and developers can still make a small fortune. Whether the price drops for homes that exceed £1 million will reverse – well we’ll have to wait and see. The prime central London residential market is still one of the strongest in Europe and the drops experienced at the end of 2015 could just be a minor blip.