Prime London slowdown continues...

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12 October 2015

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Price growth in prime central London looks set to slow further as the property market faces a number of headwinds.

Knight Frank has cut its prediction for annual price growth saying that buyers have been scared away by several factors, including rising stamp duty and global economic uncertainty.

Figures published by Knight Frank last month showed prime central London suffered a subdued summer after the excitement of recent years.

Annual price growth of just 1.7% was the lowest in more than five years.

Now Liam Bailey, global head of research at Knight Frank, has warned that growing headwinds have reduced annual price growth from 5% at the end of last year to 1.3% in September.

He added: “These challenges have been led by the increase in stamp duty at the end of 2014, a factor that will continue to weigh on transactions and price growth into 2016 as the market absorbs the new rates."

The emerging market slowdown and recent Black Monday crash in China has also hit buyer interest.

“Global economic uncertainty centred on China has dampened demand to some degree," Bailey said.

But he said a crash was unlikely. "The strength of the UK’s economic recovery, employment growth in London and the likelihood of continued low interest rates mean price growth will remain positive next year.”