London Luxury Homes to Take Five Years to Return to Peak Values
(Bloomberg) -- London luxury homes won’t return to their peak values of 2014 for at least five more years, new property forecasts suggest.
Broker Knight Frank LLP on Thursday predicted a 25% price rise in the toniest neighborhoods in the center of the city through 2025, while Savills Plc sees an increase of almost 22%. That would reverse a 21% decline since their high as a series of tax hikes and economic uncertainty over Brexit weighed on transactions.
Sales in London’s luxury home market plummeted in 2020, as travel restrictions amid the pandemic kept the world’s wealthy away, and those buyers still in the market increasingly opted for spacious countryside mansions over urban apartments. That contrasts with the rest of the U.K. market, where values and transactions have risen strongly on the back of a stamp duty sales tax holiday.
A tax increase on foreign buyers in April could also slam the brakes on deals in the city center, Knight Frank said. As a result, it now expects home values there to rise 2% this year compared with 3% previously. The pandemic may also continue to weigh on the market.
“Demand from international buyers may initially be more skewed toward properties with outdoor space than it was before the pandemic,” the broker said in the report. “This could make any recovery in prime central London prices more inconsistent across different property types.”
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