(Bloomberg) -- Political chaos and a series of tax hikes pushed the average price of a home in London's most-desired districts down by almost 5 percent last year, paring it to a low not seen since the start of 2013.
Home prices in the U.K. capital's prime postcodes -- which include Chelsea, Islington, Kensington and Mayfair -- dropped 1.5 percent in the final quarter of 2018 as lawmakers failed to reach an accord on Brexit, data compiled by broker Knight Frank show. That extended the decline for the year to 4.6 percent.
London's high-end house prices have been hit by a succession of tax reforms that have boosted the sales-tax bill for the most expensive homes to as much as 15 percent of the purchase price. The hikes, coupled with uncertainty about the country's political and economic future, has decimated the market for homes and reduced transaction levels to historic lows.
“Both pricing and sales volumes were on a downward trajectory in the second half of 2018,” Knight Frank's head of London residential research, Tom Bill, wrote in the report. The downturn highlights “the impact of political uncertainty over the last six months.”
Prices in the best areas around the edges of central London, where thousands of new apartments are being built, fell at a near identical pace to the prime areas and are now at a five-year low, the broker said in the report Monday. Those districts include Canary Wharf, Hampstead, Richmond and Wimbledon. Pockets of housing-oversupply in some of those regions are also eroding values.
To contact the reporter on this story: Jack Sidders in London at jsidders@bloomberg.net
To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Chitra Somayaji
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