Prime central London property shrugs off stamp duty fears

LONDON (May 4): The residential property market in prime central London is so far proving resilient against the impact of recent changes to stamp duty as prime central London prices had risen a further 1.1% in April.

"As was the case following last year's stamp duty rise, there was a spike in the number of £2 million [RM9.8 million] and above 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," said Liam Bailey, head of Residential Research, Knight Frank LLP in a statement on Wednesday.

"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 with March, the figure was up on April 2011."

Meanwhile, French web searches for prime central London property spiked in February following presidential candidate Francois Hollande's proposal for a new wealth tax fuelling talk about wealthy French buyers turning to London property. Knight Frank however, says in terms of exchanges, this has yet to be seen.

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 its 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% y-o-y growth in property searches], which coincided neatly with Hollande's proposal for a 75% tax on top earners.

"Interestingly, the y-o-y change in visits for the three months to April shows that, while French searches in the sub-£1 million sector have dropped off over the past year [down 14%], interest in the £5 million above bracket has surged [up 30%]."