As if London wasn’t expensive enough, luxury-home values in London’s central postcodes are expected to climb 21.5% over the next five years. You might be wondering how this could even be possible, who on earth could afford such a heavy increase? As the rich keep getting richer, their taste for expensive real estate is boosting demand.
A report from London broker Savills claims that due to an increase in tax amounts there will be a slight 2% decrease in values of properties in London’s most expensive areas this year. Average prices for these locations currently start at around 5 million pounds. However in other prime areas that aren’t as affected by the stamp duty charges, prices are likely to grow by 2 percent this year and by 18.2 percent through 2020, according to Bloomberg Business.
Chancellor of the Exchequer George Osborne raised the sales tax in December, causing a dip in the sales of lux homes. Before he increased the tax a homebuyer spending 5 million pounds would pay about 349,750 pounds in tax duty. Now that same homebuyer will pay around 513,750 pounds, which is 164,000 pounds more than they would before.
“The stamp duty reform of December 2014 was a defining moment for the top end of the prime London market, particularly as it was looking fairly fully priced having grown significantly to outperform the rest of the market over a 10-year period,” said Lucian Cook, head of U.K. residential research for Savills.
Information sourced from Bloomberg Business.