Updated: Nov 22, 2018
They say a picture paints a thousand words and when it comes to Prime Central London, the old adage doesn't disappoint. In the chart below Ludgrove has overlaid the LonRes Prime Central London price index with the relevant political and fiscal events of the last 5 years. Since 2014 the sector has faced a barrage of attacks including multiple increases in stamp duty, the removal of tax relief on mortgage interest for Buy to Let investors, the threat of Labour's Mansion Tax, restrictions on high value mortgages from the Mortgage Market Review, two General Elections and Brexit. Unsurprisingly this has resulted in a significant (-14%) decline in capital values over the 5 year period.
The question we ask ourselves at Ludgrove is can it really get any worse from here, especially as politicians seem to have already thrown the proverbial "kitchen sink"? Anything of course is possible however the UK already has some of the highest rates of property taxes in the World and there appears to be little appetite within the Conservative Party to raise property taxes further (indeed some are calling for them to be reduced). National and London transactions are suffering steep falls in 2018 as it seems taxes at the top end are gumming-up property chains, leading to a dysfunctional market further down. Sure a Corbyn led Labour Government would usher in further unwelcome attacks, but absent this we expect a bottoming out of Prime Central London capital values in 2018 and 2019.
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