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Prices in prime central London rose for the first time in five months in February, boosted by price growth in markets with a higher proportion of properties that would not be subject to a proposed mansion tax. It saw a marginal increase of 0.1%, the first since September 2014 but annual growth slowed to 4%, which is half of the 2014 average of 8.1%, according to the latest report from Knight Frank. The firm says that it is a market where activity has been kept in check by the potential of a mansion tax on properties worth more than £2 million after May’s general election. Stronger performing markets included Islington and the City and Fringe in the eastern area of prime central London, where prices grew by 1.3% and 1% respectively in February. Both recorded annual growth of 9.1%. The Riverside market, which was included in the index six months ago to reflect the high quality of developments in areas like Battersea and Vauxhall, has also risen 0.4% this year. Elsewhere, there were declines in more traditional prime markets with higher value properties, including a fall of 0.8% in Chelsea, a drop of 0.2% in Notting Hill and a fall of 0.2% in South Kensington. The existence of a two speed market was underlined by the fact values for properties worth in excess of £5 million and £10 million declined by 0.1% in February. Meanwhile, prices in the £1 million to £2 million price bracket grew 0.4% in February, up 6.8% in the last year. ‘We estimate that 46% of £2 million-plus properties are located in the prime central London boroughs of Westminster and Kensington and Chelsea. However, eight out of 10 properties on the £2 million mansion tax threshold would be located outside the two boroughs in areas of suburban London and the Home Counties,’ said Tom Bill, head of London research at Knight Frank. ‘Though any tax would be lower in value and there is more clarity on the potential levy for properties worth between £2 million and £3 million, it underlines the mistaken belief the mansion tax would start to bite in prime central London,’ he added. Continue reading →
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