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London's luxury enclaves lose their lustre as prime sales flatline

Some of the capital’s most luxury postcodes saw marked declines in sales volumes in December as a combination of Brexit uncertainty and tax rises saw buyers fleeing to more up and coming areas

According to new research by property group LCP, sales were down 21% across the Royal Borough of Kensington and Chelsea and the City of Westminster in December, compared to the same time in 2015, as owners opted to hold on to their properties in a softer market.

Price falls in these upmarket boroughs were also pronounced, with areas where prices average above £2m suffering noticeable price falls, most notably Chelsea which saw prices plummet 12.2%.

However, the figures, which have been gleaned from Land Registry and Lonres data, found that, overall, prices increased by 1.3% according to Lonres data and were up 4.5% according to Land Registry data in the year to October, driven by demand in lower value areas.

In particular, LCP singled out Marylebone, Fitzrovia and Soho as the areas in prime London which experienced the most robust price growth, with increases of up to 19.7% last year.

Commenting on the figures, Naomi Heaton, Chief Executive Officer of LCP, said: “Despite the series of new taxes impacting the market and uncertainty due to Brexit, the more up and coming areas of the market have remained attractive to buyers, particularly foreign investors, looking for good value in the face of weakening sterling.

“It is clear that in the current market, London’s centre of gravity has shifted from the traditional, luxury enclaves to the areas with lower entry prices, future growth and gentrification potential - and where tax increases have been far less painful.

“Stock in these areas also tends to be made up of small flats which are commercially rented. If buyers are unable to achieve their price expectations, they will generally hold and rent their asset, supporting prices.”