Stamp Duty will force down prime London property prices
Reports suggest that London property prices are likely to hit a wall due to the impact of the increased rate of stamp duty. Some suggest that prime London properties will experience a fall of 2% or more this year and be stagnant next year. Savills commented on this phenonemon, saying “It is fair to say that last year’s Autumn Statement took the market by surprise and has essentially prevented any bounceback in values post election, leaving little scope for significant value uplift next year, particularly in a low inflation environment." 

Although remortgage activity is at a fever pitch currently for the majority of the country, Londoners are seeing another issue arise regarding the UK housing market. House prices in the capital city are expected to hit a wall of sorts and not increase as expected before the new stamp duty. In fact, it is estimated by many within the market that the housing economy will actually see a slight depression within the city limits.

The prime properties in the city of London will actually experience a fall of possibly 2% or more this year and be stagnant next year, according to research conducted by the agents Savills. A recovery is expected in the year 2017, but not before the prices will dip due to higher stamp duty.

Lucian Cook, head of residential research at Savills, commented on the impact of higher stamp duty, saying: “It is fair to say that last year’s Autumn Statement took the market by surprise and has essentially prevented any bounceback in values post election, leaving little scope for significant value uplift next year, particularly in a low inflation environment.

“As such, we have pushed out our five-year forecast by a year to 18 months, building in a period of little or no growth as the market continues to adjust to a new fiscal and regulatory environment.”

Londoners planning to build equity in their million pound properties will have to wait at least two years for the stamp duty to not have a negative effect on their investment. Remortgaging that same property could have a positive affect by possibly lowering the interest rate and therefore lowering the monthly payment amount.