London house prices: Demand for luxury new-build apartments will drop this year – and prices won’t recover until 2018
Demand for London's luxury new-build apartments has fallen, one of the world's largest property services companies has admitted – and prices won't begin to recover until 2018.
JLL said it was cutting its growth forecast for the capital's high-end properties, after economic uncertainty and the chancellor's three per cent stamp duty hike for second home buyers had created a "diminishing appetite" for homes worth more than £2m.
The company said it expected prices for luxury new-builds to fall three per cent in 2016, followed by flat growth in 2017. Prices will only begin to recover in 2018, when prices will rise four per cent.
"Transaction levels in JLL's [high end] offices fell by over 20 per cent [after new stamp duty rules were introduced]," it added.
"This impact has been more pronounced for the highest value properties, with falls of up to 12 per cent for homes worth over £10m and as much as seven per cent for homes worth over £2m."
In fact, one of the unintended consequences of the government's hike in stamp duty could be a fall in the number of new homes being built in the capital.
"A devastating [consequence] for London’s vitality, is a reduction in the supply of new homes at a time when London needs to see dramatic increases in development activity," it said.
"Construction, already challenged by high build cost inflation, will in many instances be delayed or cancelled due to deteriorating sales conditions. This is likely to drive a reduction in housing starts across London, precisely the opposite of policy intentions from both central government and the Greater London Authority."
