Completed sales of new-build flats in central London fell 41 percent in 2016, with average prices for new builds also taking a hit.
According to Land Registry Data analysed by property advisor London Central Portfolio, developments in central London have been worst affected by recent residential tax changes and Brexit uncertainty.
Completed sales of new flats fell 41.4 percent in the fourth quarter, with the luxury end taking the biggest reduction in sales. Stamp Duty increases have hit the market hard, with three successive rises since 2012 increasing the percentage from 5 percent o 15 percent in some areas.
For new-build properties under £1 million a 38 percent fall in sales was recorded, although LCP attributed this to a smaller stock availability. Naomi Heaton, CEO of LCP comments:
“Whilst the story for new builds in PCL, particularly luxury property, looks grim, these represent a very small proportion of the PCL market due to the lack of development possibilities. There were only 867 new build sales in 2016, representing just 14.6% of total property sales. Although sales volumes in PCL as a whole were at their lowest level on record, average prices saw a 3.75 percent rise over the year.”
“The large fall observed in Q4 for new flats under £1 million, targeting the domestic market, is also concerning. Alongside negative sentiment affecting purchasing decisions, with more economic uncertainty ahead, the fall was also be due to new caps on mortgage lending, restricting borrowing to 4.5 times salaries. This is hampering domestic buyers’ ability to get onto the housing ladder or trade up”, Heaton concluded.