Sales of London mansions falter amid low confidence and non-dom exodus
The average price of London mansions fell further in May as buyers stayed away from the market amid a downturn in confidence.
Average prices fell by 3.2 per cent year on year, according to data from Lonres, while transactions fell 35.8 per cent year on year.
Transactions for homes over £5m fell 14.7 per cent year on year, despite a 22.4 per cent increase in the number of homes for sale.
Rental prices, meanwhile, rose 3.3 per cent – a good sign that demand is higher for temporary rented space than long-term residence in the capital.
“Uncertainty around the global economy and the perception of unfavourable tax changes continue to limit demand,” Nick Gregori, head of research at Lonres, said.
Data from BCG found a drop in confidence for wealthy individuals in the UK in June, while the non-dom exodus has become ever-clearer.
But things might be quite as bad as they seem: There’s also the distorting effect of the changes to stamp duty holiday, which encouraged buyers to pull transactions forward into February or March to take advantage of a lower tax bill.
“On its own, the May data doesn’t look great for the prime London sales market, which recorded a second slow month after the stamp duty holiday-induced flurry of activity in March,” Gregori said.
Gregori said the overall picture is that “demand is a little behind where it was over the same months last year, with supply a little ahead”.
Founder of Jefferies London, Damien Jefferies, added that “we’re simply not seeing these big ticket purchases in the current market” which has pulled average prices down.
“In a market that operates very much on a quality over quantity basis, a single transaction can dramatically change the picture,2 he said, adding that he expects the market to “settle” over the rest of the year.