The market in London started to slow about three years ago, with property prices at the upper to high end of the capital particularly vulnerable ever since the now former chancellor George Osborne decided to reform stamp duty in December 2014, making the property acquisition tax more expensive for anyone acquiring property worth more than around £937,000.
Prices have dipped in and around central London by as much as 10% since their 2014 peak, and could fall further, with a recession induced by Brexit still possible.
The markets in well-heeled areas have been particularly affected by Brexit and high levels of tax, with prices slowing following a period of rapid growth, which largely explains why so many homes were withdrawn from the sales market in 2017.
“2017 saw the number of transactions in London fall, as Brexit caused buyers to prevaricate and hedge their bets,” said Paul Cosgrove, director at Finlay Brewer.
But Cosgrove believes that the softening of prices in the capital will encourage buyers across all segments in 2018 and give the market “a real boost”.
He added: “In most price brackets, values are back to where they finished the year in 2013, so factoring in the still highly attractive currency swap for dollar and euro denominations, we expect the number of transactions to steadily rise in 2018 as price falls continue to peter out.”
Shereen Malik, senior sales negotiator at UK Sotheby’s International Realty, also anticipates that there will be a “slight uplift” in London’s housing market in 2018.
Although there have been several factors causing the uncertainty in the London property market, Malik reports that many buyers have started to adapt to the stamp duty levy on second homes and Brexit.
“These factors are now being accepted and those dedicated to purchasing a property in London will continue to do so,” he said.
However, north London estate agent, Jeremy Leaf, expects the market in the capital to remain sluggish.
He said: “Where prices have risen the furthest and fastest in the London property market, making it effectively overheated, we expect it to be relatively flat next year.”
Kames Capital’s David Wise expects to see a further correction in 2018.
“London is, as expected, showing signs of slowing down as the government works its way through the Brexit negotiations, and we believe the London market is at a late-cycle stage so we expect a correction/slowdown in the future, but not a crash.”