The rate at which the value of residential real estate in London is increasing has slowed down, according to new research from Savills. The firm believes this is due to continued uncertainty over the eurozone crisis, as well as the introduction of higher stamp duty taxes on properties worth GBP 2 million or more in March this year. Price rises for prime central London homes averaged 0.5 per cent in the three months to the end of September, with annual growth now standing at 5.1 per cent, compared to the 9.1 per cent recorded 12 months earlier.
Director of Savills research Lucien Cook stated: "Detailed analysis of the index suggests that it is increasingly the best-in-class of prime London homes that are underpinning average price growth." The organisation singled out Chelsea, Knightsbridge and Belgravia as the three districts that have experienced the greatest residential property price rises on an annual basis. However, Nigel Ellis, director at estate agency Prickett & Ellis, said accurate valuation of properties is essential for the market to remain strong. "What we have got is, in effect, a two-tier market where anything at the right price is going really quickly - and that is probably even more so than it was before. Anything overpriced is, as you would expect, not selling," he asserted.
Mr Ellis claimed that over-valuation is causing the sales market to slow, with Mr Cook commenting that buyers are taking longer to make decisions over purchases because they "want to be sure of value". The Savills representative also highlighted this summer's Olympic Games as a further factor that resulted in reduced activity in the central London property investment market. Meanwhile, Mr Ellis is positive about the outlook for the city's residential real estate industry, noting that the buoyancy of prime districts has helped boost the appeal of certain London suburbs that were previously not as desirable.