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Luxury Home Sales in London Hit Seven-Year Low amid Anticipated Changes to Stamp-Duty Tax

Posted by Hannah Raissa Marfil on Feb 15, 2016 12:52 PM EST
House Prices Are Stagnant In London more big
LONDON JUNE 10: Mr Parvizi from Harmex looks at To Let signs on June 10, 2005 in London, England. . Towards the end of 2004, the most hawkish forecasters were contemplating a fall in prices of up to 7% this year, but there have been few signs of prices falling off a cliff, with data instead showing a market largely in stagnation. Stable interest rates, steady economic growth and underlying confidence in future prospects are expected to limit any price falls, experts say. (Photo : Graeme Robertson/Getty Images)

Central London's posh neighborhoods saw a dip in luxury home sales in January, as potential homebuyers were awaiting the effect of a pending stamp-duty tax change.

The luxury housing markets of London's Kensington, Chelsea, Mayfair and Westminster only saw a total of 167 existing home sales in January, according to a report from Bloomberg, citing data from London-based broker Huntly Hooper. The number of existing home sales was 30 percent below the average volume of home sale transactions for the same period in 2010 and the lowest since January 2009.

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Oliver Hooper, Huntly Hooper's director, stated, "People are waiting to see what impact the stamp-duty change in April will have on the market. There's a hold-off between buyers and sellers at the moment because of the discrepancy in pricing."

Luxury home sales have dipped since Chancellor of the Exchequer George Osborne imposed the higher stamp-duty tax of as much as 12 percent for expensive housing properties in the UK. Additionally, beginning in April, second homes in the country, as well as buy-to-let properties, would be levied a stamp-duty tax that will be 3 percentage points higher than buyers who are purchasing a home to live in.

The drop in luxury home sales was also observed in a Knight Frank housing market analysis, according to a report from City A.M. The report showed that the sale of super high-end properties, costing £10 million ($14.48 million) or more, have decreased 32 percent as compared to 2014. Super prime property home sale transactions have dropped to 130 in 2015, versus 2014's 195. 

The same report also highlighted the change in stamp-duty tax for luxury home properties sold. In the super high-end property market, a £10 million ($14.48 million) home property would be imposed an additional stamp duty tax of £400,000 ($579,124). The rise in stamp-duty tax was said to have contributed to the low demand in London's luxury housing market.

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