The average house price in central London now stands at £820,200 following a 2.3% increase in the first quarter.
According to research from CBRE, prolonged demand from overseas investors has maintained the upward pressure on house prices in central London, which are now 16% above their 2007 peak.
The performance of London’s residential market partly reflects a larger proportion of equity rich buyers who are not mortgage constrained. South East Asia continued to be the primary source of demand for new-build residential in central London, but buyers from the Middle East are beginning to return.
Middle Eastern buyers made up 16% of prime central London sales in Q4 2011, up from 3% in Q1 2011.
Mark Collins, head of residential at CBRE, referring to the introduction of 7% stamp duty and the new 15% rate for buyers purchasing through special-purchase vehicles, said: “Buyers at the top end of the market will clearly review their investment strategies, which could cause some stickiness, but the merits of the London market outweigh the tax disadvantage because it is a safe haven for stable long-term investments.
“It is also worth noting that the introduction of a 5% threshold on homes over £1m last year did not have a material impact on the market. However, the implementation of the higher rate could cause an increase in demand for homes under £2m as buyers seek to avoid the higher rate of tax altogether.”
annabel.dixon@estatesgazette.com
