London’s luxury housing recovery set to stall for another year
LONDON’S long-promised luxury housing market rebound is stuck in wait-and-see mode.
Real estate broker Savills slashed its 2022 forecast for price increases to 4 per cent from 8 per cent, revising a prediction it made as recently as November for prime central London properties. Bigger gains are now forecast for 2023 instead, though the bounce back in prices to the previous record will now be delayed beyond 2026, a report by the broker showed.
London’s high-end housing market has missed out on the UK’s recent house price boom as tax hikes, clampdowns on money laundering, Brexit and the chaos unleashed by the coronavirus pandemic damped demand. The city’s priciest postcodes are still 17.6 per cent below their 2014 peak, data compiled by Savills showed.
The market was expected to bounce back by the end of 2026, but average prices now will not quite recover within that period, according to the most recent forecasts.
“The long-awaited bounce in values in prime central London has been pushed out to 2023,” Savills research analyst Frances McDonald wrote in the updated forecast. “This reflects a slower pace of return of international buyers than anticipated, as well as the war on Ukraine and current domestic political instability, which have caused a degree of caution that is constraining price growth.”
The prices of glitzy central London apartments and mansions began falling after then-chancellor George Osborne hiked taxes on high-end homes at the end of 2014, following up 16 months later with further tax increases for second-home owners and investors. The government has also removed incentives to hold property through offshore companies and has recently introduced a register of beneficial owners designed to prevent potential money launderers from hiding their assets.
“Requirements to register beneficial ownership of homes held in offshore vehicles have the potential to curb some demand among a limited number of buyers in the longer term,” McDonald said. “But, while historically there have been many benefits to using offshore vehicles to hold UK property, the tax advantages have largely already been removed.”
While there are signs that overseas visitors numbers have begun to recover after the coronavirus pandemic, the pace of recovery has been slower than expected. That is a particular issue at the top end of London’s housing market which has long been dominated by international buyers.
“There is still a shortage of overseas purchasers willing or able to come to London to view properties,” Christopher Ames, a Belgravia-based real estate broker said in the Royal Institution of Chartered Surveyors’ Residential Market Survey published last month. “The home demand is thus more dominant but more aware of rising fuel prices and interest rates. The autumn market could well be more of a buyers’ market.” BLOOMBERG
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