Completed new build sales have now been registered for last year, and London Central Portfolio has examined the impact that Brexit uncertainty and residential tax changes have had on this sector.
Land Registry data has confirmed that prime central London new build sales have been most affected. In the last quarter of 2016, completed sales of new flats were down 41.4% over 2015, and average prices fell by 8.7%.
The London Central Portfolio confirmed that London’s luxury property market witnessed the biggest sales reduction. High foreign ownership taxes, three Stamp Duty increases over the past five years, and increases of up to 15% on some sale prices have all had an impact, including a 57% reduction in the sale of new builds valued at over £5m.
Sales figures for prime central London new build homes valued at under £1m were also down by 38%. This may be due to less availability of new housing stock at this price point, however, as homes valued at under £1m now account for only 22.5% of new build sales in prime central London areas.
London Central Portfolio CEO Naomi Heaton said that these grim figures represent a small proportion of the prime central London market because development options are fewer. She said that last year there were only 867 new build sales, representing only 14.6% of total sales of property in general.
Stamp Duty Additional Rates has Impact
Government tax changes had an evident effect. Buyers hurried to beat last year’s April deadline for the new Stamp Duty additional rates on second properties, as evidenced by the fact that 44% of central London’s new build sales took place during the first quarter. The first quarter actually witnessed the highest ever number of prime central London property sales, so the impact of the stamp duty additional rates is clear.
Inner London also saw large decreases in new build sale completions at the end of last year. Average prices for new flats were down by 2.1%, and overall, sales were down 3.9% in the last quarter of 2016. There was also a substantial fall of 29% compared with the third quarter.