Are London Luxury Home Prices Plummeting?
Recent figures from property consultants Strutt and Parker suggested a drop in luxury property value at around 20%, sparking concern amongst estate agents and homeowners alike after CNBC published the findings.
But data alone doesn’t tell the whole story, or any story at all. We reached out to London property expert Jeremy McGivern – founder Mercury Home Search and author of ‘The Prime London Property Puzzle’ – for his take on the controversy.
He was quick to note one essential detail: the drop in value was in luxury property transaction compared to the same quarter last year, rather than in property value. That means that buyers are being more cautious with their money, not that the assets themselves are worth less.
Though prices have fallen slightly, they’re nowhere near the dizzying drop of 20%. In fact, some areas saw a modest rise.
“High quality properties are still in demand and achieving similar prices to 3 to 5 months ago,” said McGivern. “Marsh and Parsons think prices were “up” 0.5% in the third quarter in prime central London as a whole.”
There’s also the small matter that 2013 was a very strong year for luxury sales, so figures from 2014 were almost certain to come up short.
Of course, if buyers keep their purse strings tight in the long term then luxury house prices will be forced downwards. However, McGivern sees this as a temporary market state bought about by uncertainty over the Labour Party’s proposed Mansion Tax.
McGivern doesn’t have high hopes for this policy becoming a reality. First, Labour will have to win the election and even if they do, they’ll have to ignore the drop in house sales that their proposals have caused.
Hopefully, the hefty market impact seen this year will convince politicians against the Mansion Tax regardless of who wins.
“But then asking a politician to consider the potential unintended consequences of their actions is like asking my children not to attack me with swords and light sabres at 6am in the morning,” McGivern joked.
So should you worry? Not yet. The cause of this drop is political and unlikely to be long term – if you’re sitting on a luxury London property, it’s safe for now.
Jeremy McGivern is our trusted source on all things property. Visit www.mercuryhomesearch.com to learn more about his services.