- House prices in areas of London have fallen by nearly 15% in the past 12 months
- Former Chancellor George Osborne's rise in stamp duty is to blame, say experts
- Average price of a house in the ‘prime central London’ market has fallen 6.6%
- The worst hit areas were Bayswater, Chelsea, Kensington and Notting Hill
House prices in parts of London have tumbled by nearly 15 per cent in the past 12 months following a tax raid by George Osborne, according to a report.
Estate agency giant Knight Frank said values have been slashed ‘as a result of higher rates of stamp duty’ introduced by the former Chancellor before he was sacked.
The boss of rival Savills said the stamp duty surcharge on second homes and buy-to-let properties was ‘the final nail in the coffin’ for the London market.
House prices in parts of London have seen a 15% drop in value thanks to former Chancellor's George Osborne's increased rates of stamp duty. The worst affected was Bayswater
But Knight Frank said ‘price declines may be close to bottoming out’ as the fall in the pound following the Brexit vote makes property in Britain more attractive to wealthy foreign buyers.
There are also signs that overseas investors worried about looming elections in France and Germany and the outlook in the United States under Donald Trump are ploughing money into Britain.
‘Signs of stability have emerged against an uncertain political backdrop,’ said the report by Knight Frank.
Knight Frank said the average price of a house in the ‘prime central London’ market has fallen 6.6 per cent in the past year.
Estate agency giant Knight Frank said values have been slashed ‘as a result of higher rates of stamp duty’ introduced by the former Chancellor before he was sacked (stock: Notting Hill)
The worst hit area was Bayswater, north of Hyde Park, where prices fell 14.7 per cent, while Chelsea suffered a 13.3 per cent fall and Kensington an 11.6 per cent drop.
Other areas to be hit were Notting Hill, down 10.7 per cent, Fulham, off 10.2 per cent, and South Kensington and Knightsbridge where average prices fell 7.4 per cent.
Knight Frank, which specialises in selling multi-million pound homes across London, put the blame firmly at the door of Mr Osborne and the recent hikes in stamp duty.
‘Asking prices have been revised down as a result of higher rates of stamp duty,’ said Tom Bill, head of residential research in London for Knight Frank.
‘It should be remembered that Brexit has only had a marginal impact on the prime London property market to date.
‘Stamp duty has been the primary cause of the recent market slowdown and Chancellor Philip Hammond is the politician who will continue to wield the most influence over the market.’
As Chancellor, Mr Osborne raised stamp duty on homes worth more than £937,500 – hitting vast swathes of the London housing market.
The increase has pushed the levy on a £2million home up by £53,750 to £153,750 while the tax on a £5million home has gone up by £163,750 to £513,750.
Mr Osborne also introduced a three percentage point stamp duty surcharge on second homes and properties bought by landlords including buy-to-let investors.
Jeremy Helsby, chief executive of rival estate agent Savills, said: ‘For London, the extra 3 per cent for the second homes is just the final nail in the coffin. The original rates were high already, but London is a market where lots of people have second homes. That extra 3 per cent has really hurt the market.’
The worst hit area was Bayswater, north of Hyde Park, where prices fell 14.7 per cent, while Chelsea suffered a 13.3 per cent fall and Kensington an 11.6 per cent drop. Other areas to be hit were Notting Hill, down 10.7 per cent, Fulham, off 10.2 per cent, and South Kensington and Knightsbridge where average prices fell 7.4 per cent (stock image of a Notting Hill home)
But the Knight Frank report found that prices across prime central London nudged up a tiny 0.1 per cent in February alone, while the number of transactions it has dealt with in the last six months was 20 per cent higher than in the same period a year ago.
Mr Bill said foreigners have been attracted to the capital by the fall in the pound, with those buying in US dollars seeing a 21 per cent discount since the Brexit vote.
Indian and Hong Kong buyers have also seen a 21 per cent discount while prices are down 17 per cent for Chinese investors and 28 per cent for Russians.
‘London could also benefit from geopolitical uncertainty, including a full calendar of European elections and a US President whose style marks a break with convention,’ Mr Bill added.