Prime property in London declines while the price of lower priced homes continues to rise

London prime property transactions and prices dropped while lower priced property remained booming d

London prime property transactions and prices dropped while lower priced property remained booming due to stamp duty changes - Credit: PA Wire/PA Images

Sales of property in London costing £2million or more declined by 64 per cent in 2015 according to new figures

A report by London estate agent Douglas & Gordon found that the stamp duty overhaul at the end of 2014 had caused the prime London property market to collapse by nearly two thirds last year.

Tax on properties up to the £937,000 mark decreased following the removal of the old slab structure but for properties valued above £1.5million a 12 per cent levy was introduced.

The estate agent say that this increase is the behind the decline in transactions of prime property in London as well as a 1.4 per cent drop in sales values in that segment of the market in 2015.

Executive director of Douglas & Gordon Ed Mead said: “The significant drop in sales of £2million+ properties during 2015 shows the profound impact of the SDLT changes.

“Tax revenues will have fallen sharply as a result, so we would urge the government to consider lowering the higher SDLT rates.”

However, at the lower end of the market prices are expected to continue rising this year due to a lack of supply.

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Recent figures from the Royal Institution of Chartered Surveyors (Rics), showing that the supply of homes on the market is at a record low.

Meanwhile, HM Revenue and Customs (HMRC) figures have shown that UK home sales during September to November were 5.2 per cent higher than in the same three months a year earlier.

A “bumper backlog” of nearly half a million homes across England are still waiting to be built after being given planning permission, according to separate analysis released by the Local Government Association (LGA).

A study commissioned by the LGA found that 475,647 homes were yet to be built across England in the financial year 2014/15 after being given planning permission.

Mr Mead said: “Looking ahead, we are expecting the market to be split around the £1.5million mark.

“Property worth up to £1.5million could grow in value by as much as 5 per cent, but owners of any property worth more than £1.5million can expect a static year.”