London mansion values start to climb on more realistic prices

Luxury residential properties stand in Grosvenor Crescent in London, UK, on Friday, Dec. 30, 2016. Luxury home prices in some of London’s most expensive districts are down more than 10% this year, and land values are also dropping. (Bloomberg pic)

LONDON: London’s moribund luxury homes market is showing signs of bottoming out.

Values in the best districts rose 1.2% in the second quarter from a year earlier, the fastest annual rate in almost three years, as buyers took advantage of price cuts after higher sales taxes damped demand. More homeowners are also looking to sell, and deals are rising as pricing becomes more realistic, researcher LonRes said in a report, citing a survey of agents.

An increase in stamp duty, higher taxes on landlords and second-home owners and a glut of new houses have combined to hurt the performance of the once red-hot luxury homes market in the UK capital. Now, a glance at internet listings services shows cuts to asking prices of more than 30% for period houses in the center of the city as the difference between sellers and buyers on values narrows.

“The prime central London market appears to have woken from its slumber,’’ Marcus Dixon, head of research at LonRes, said in the report. “Agents still expect Brexit uncertainty to remain the most significant barrier to increasing sales activity over the next 12 months.’’

Since the prime central London market peaked four years ago, homes valued at 2 million pounds ($2.6 million) or more have declined 12%, the researcher’s data show. Overall, values there are down 9.6%. Prices were largely unchanged on a quarter-by-quarter basis.

Unease among buyers over purchasing before Brexit takes effect will benefit landlords in the coming months, according to the researcher. Rents in the best districts have risen 3.9% in the past year to 1,120 pounds a week, the data show.