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Concerns around interest rates and property taxes have impacted on sentiment within the prime central London residential market, it is claimed. The latest market commentary report from W.A. Ellis says that sentiment within the housing market often reflects the mood of the overall economy and this has resulted in demand falling over the last four months. Richard Barber, director of W.A.Ellis, pointed out that this coincides with the Bank of England’s ‘sabre rattling’ over raising interest rates and increasing taxes on property, particularly those with a high capital value or owned by foreign investors. ‘This, coupled with the run-up to what must be the most property centric general election that we have experienced, is what is now bringing swift realism to our previously bullish market,’ he said. ‘The prime central London market is undoubtedly slower, and the usual withdrawals from the market are becoming more apparent as discretionary sellers now wait and see the result of the general election. Purchasers are also more wary of paying last spring’s frothy prices,’ he explained. ‘There are many factors influencing our market, both negative and positive but undoubtedly higher property taxation, stronger sterling and a fear of the politically unknown has had a cooling effect,’ he added. This has influenced the firm’s more restrained prediction of 1.5% growth within the prime central London market through 2015. ‘More positively, we expect to see 4% growth within the central London new development market and the interest generated from the third phase of the Battersea Power Station development is indicative of the sustainable growth we foresee within this sector,’ said Barber. ‘Furthermore, our research predicts stronger growth in prime central London from 2016 to 2019, once political uncertainty and potential increased taxation has been absorbed, culminating in a predicted rate of growth of nearly 20% from 2015 to 2019,’ he added. In the sector’s lettings market Lucy Morton, director and head of agency, explained that the end of the month has seen the release of third quarter research results from Lonres, the agents’ intranet, which have confirmed that the recovery in the central London rental market that began earlier in the year has continued, boosted by the positive state of both the UK and London economies. There were 43% more properties let in the third quarter of 2014 than in the previous quarter, although this is still 4.6% less than in the third quarter of 2013. ‘While demand from tenants for properties has increased, stock levels have eased back. There were 9.5% fewer properties available to let across central London in the third quarter of 2014 compared to the same quarter in 2013,’ she said. ‘Demand is out stripping supply at the lower levels of the market but there is more of a balance in the middle tier of the market, with the most choice for tenants with budgets from £1,000 to £2,000 per week,’ she pointed out. ‘Competition for properties has increased rents over the last quarter indicating an optimistic outlook… Continue reading →
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