Above:Stamp duty reforms and low oil prices are making real estate in the capital unaffordable for more investors.

Summary:

• The total value of property transactions in some of London’s most expensive postcodes has fallen nearly 25% in 2015
• Stamp duty reforms, low oil prices and changes to the non-dom tax status are contributing to the slowdown in what was already one of the world’s most expensive property markets
• Areas such as Manchester have seen huge levels of institutional investment over the last 12 months as more investors realise the potential in buying in high growth areas outside of London

Is demand for luxury London real estate now past its peak?

The total value of property transactions in some of the city’s most desirable locations has declined by almost 25% over the last year, according to the latest data from LonRes. £3 billion was spent on homes and apartments in addresses such as Chelsea, Kensington and Westminster, down by 24.5% on 2014’s total, while average property prices in these areas also fell by 1.4%.

Already a market approaching an affordability ceiling, the rising cost of stamp duty, changes to the non-dom tax status and poor performance in global stock markets such as China is now making London out of reach for many more investors, reducing the number of transactions and stunting the market’s growth.

Anthony Payne, Director at LonRes, simply stated that “those people who were awash with cash don’t have as much cash to spend.”

“The top end of the market in the last few years has been reliant on foreigners, but a series of things are affecting them that are out of the government’s control — the strength of the pound, the weakness of the oil prices, the state of Chinese markets”, he added.

2015 has been a year where many investors have begun to realise the opportunity of acquiring assets in other UK cities on the verge of a new growth. Manchester, for example, has been named as one of the main beneficiaries of £30 billion the British Property Federation estimates is ready to be invested in the build-to-rent property sector.

Source: Select Property