Number of new £2m+ applicants in April was 13% higher than in March, signalling prospective buyers were not deterred by the stamp duty rise
Both prices and applicant numbers rose in Prime Central London during April, despite the Budget announcement in March to increase stamp duty to 7% for individuals and 15% for those purchasing as “non-natural persons”. Liam Bailey, Knight Frank’s Head of Residential Research, examines the figures.
• Prime Central London prices rose a further 1.1% in April
• Number of new £2m+ applicants in April was 13% higher than in March, signalling prospective buyers were not deterred by the stamp duty rise
• Sales subject to contract in the three months to April were up 50% on the same period last year
• French web searches for Prime Central London property spiked in February following election candidate Francois Hollande’s proposal for a new wealth tax
“Early indications of the impact of recent changes to stamp duty are that the market is so far proving resilient.
“As was the case following last year’s stamp duty rise, there was a spike in the number of £2m+ exchanges in March and the number of sales for this April is higher than that for April last year. It is important to note however that activity was relatively weak last April.
“The picture from our purchaser activity indicators is also positive. Applicant volumes are not only stronger in April than in the same month last year but, reassuringly, they were also up 13% on last month, signalling that prospective buyers have not been deterred by the stamp duty changes. Though the number of viewings was down 7% in April compared to March this year, the figure was up on April 2011.
“Meanwhile, there has been much talk about wealthy French buyers turning to London, spooked by French election candidate Francois Hollande’s talk of wealth taxes. But is there any substance to the rumour? In terms of exchanges the answer is: not yet. Knight Frank saw just one additional sale to a French national in the first four months of this year compared with the same period in 2011. But there is anecdotal evidence of increasing interest, both in terms of the number of walk-ins reported by our offices and of prospective buyers searching online.
“By looking at search activity on Knight Frank’s Global Property Search website, we see that the number of French web users viewing prime central London properties on the site began to increase as the eurozone crisis hit in May 2011. Although this activity began to tail off later in the year, there was a significant spike in February (68% year-on-year growth in property searches), which coincided neatly with Hollande’s proposal for a 75% tax on top earners.
“Interestingly, the year-on-year change in visits for the three months to April shows that, while French searches in the sub-£1m sector have dropped off over the past year (down 14%), interest in the £5m+ bracket has surged (up 30%).”