The prime London housing market has faced a number of challenges over recent years as a result of a changing political and fiscal environment.
The reform of stamp duty announced in the 2014 Autumn Statement has had a bigger impact on the prime London market than many forecast. However, where the tax burden has increased the adjustment to prices has been relatively rational and in line with the additional stamp duty increase. Following this, the announcement in the 2015 Autumn Statement of increased stamp duty payable for buyers of “Additional Homes” has caused further small price falls in the market.
Property prices in Kensington and Holland Park are forecast, in line with prime central London, to remain broadly flat through 2016 and most of 2017 due to the increased tax burden and the political uncertainty stemming from the May mayoral election and EU referendum in June.
However, we expect there to be a gradual return to trend rates of price growth over the medium term supported by the fundamentals of wealth generation.
The rental market
The economy and employment opportunities are key drivers of the prime rental market in London. With both factors forecast to continue improving over the next five years, the attractiveness of London will continue to strengthen for those looking to relocate. Kensington and Holland Park are well placed to draw on this demand as they are already popular locations for those moving for employment reasons.
The rental market in London is very dependent on the balance between the supply and demand of properties. Where there are high levels of new build stock coming to the rental market simultaneously, rental values are being put under pressure.
Within Kensington and Holland Park new developments are on a small scale. However, there are larger schemes coming forward in the fringes of the area, most notably in West Kensington and Earl’s Court. This means that tenants will have more choice between new build properties and the second hand offering, so landlords will need to maintain their properties to a high standard to remain competitive.
