£2.5m-£5m London market seeing most activity in 2014

Prime Central London (PCL) property transactions are stabilising, according to a leading property consultancy, with sectors of the market recording year-on-year growth.

Research by consultancy W.A.Ellis shows that between January and August 2014, there were 1,242 PCL transactions compared with 1,288 for the same period in 2013, which represents a year-on-year reduction of just 3.5 per cent.

Whilst the Damoclean sword of mansion tax continues to hover over the PCL market, these figures suggest that it has not as yet impacted. Indeed, sales between £2,000,000 and £5,000,000 have increased by 11.7 per cent this year, added W.A.Ellis.

However, sales of properties over £5,000,000 have diminished by 5.5 per cent. The reduction in activity in the £5,000,000-plus bracket is perhaps indicative that the foreign investor may tolerate a tax of £15,000 per annum (based on the current ATED charges) but not the more punitive £35,000 charge per annum currently applied to properties held in company names with values in excess of £5,000,000.

Meanwhile, in the London lettings market August had a surprisingly high level of activity in what is usually a very quiet month – according to W.A.Ellis, there was a 14 per cent increase in tenancies starting compared to the same month last year.

A spokesperson said: “The seasonal student market is in full swing, with students focusing on finding accommodation for the upcoming year and demand exceeding supply. We agreed two ‘Face-Time’ deals this month… in South Kensington and Hertford Street.

“This highlights a new breed of techie tenants who are savvier than ever before in their approach to the property market. We are also noticing an increasing trend of tenants coming back to the market and looking for new rental properties as a result of their landlords opting to sell ahead of the new capital gains tax, which is set to affect foreign owners from 6th April next year.”

Rejection of ‘Boris Island’ development a boost for Thames Esturary prices

News that the Airports Commission has rejected a new airport in the Thames Estuary – championed by Mayor Boris Johnson – as a viable solution for London’s air traffic expansion needs is expected to boost the property markets in those areas that would have been affected, namely Thames Estuary, Medway and South Essex.

Research by an on-line property portal showed that in February, Medway had a demand index of 59 per cent, the 15th best place in the UK for demand versus supply. But in July this dropped to 37 per cent, a 22 per cent reduction in buyer demand and confidence, which was more than any other large town or city in the country.

“With the sinking of Boris Island, we now predict local property prices taking off,” a spokesman for the portal said. “In our Property Hot Spot Index release in June, Medway, the epicentre of properties that would potentially be affected by Boris Island, saw the biggest fall in demand of all UK areas. Consequently we are predicting a significant rise in house prices along the North Kent coast now that Boris has lost the battle of the skies in the Thames Estuary. If you live in the Medway area, Canterbury, Whitstable, The Isle Of Sheppey etc, expect to see a rise of at least 20 per cent plus in the next 12 months.”

It is not good news for all homeowners in the local area as the development of Thames Estuary airport would have seen huge investment into transport links in Chatham, Ebbsfleet and Southend, which would have helped increase property prices because of the lucrative London commuter factor.

It’s not yet known where an airport expansion will be confirmed in the South East, however property prices in Gatwick and Heathrow are unlikely to see such change as they already have established airports.