London real estate remains the best investment in the long term

The demand for luxury properties in Central London becomes more restrained on the background of high uncertainty in the political arena of great Britain, connected with the elections in may next year.

According to company Knight Frank, prices in this sector fell by 0.2% in November 2014 . It was the first decline since 2010. However, price growth in 2014 was 6.1%.

After a slight fall in prices in the second half of 2010, which was due to the problems in the Eurozone, prices for elite real estate has grown continuously for 5 and a half years, reaching during this time, growth of 73%.

If to speak about the reasons for the decline in demand for luxury properties in Central London, it is difficult to tell which factor has the greatest impact on demand.

But the main factor three: it’s the upcoming election, the prospect of the introduction of a mansion tax and the possible introduction of a tax on capital gains for non-residents. We can say that all three factors affect the market, identifying some of the risks in the short term and , nevertheless, without canceling the attractiveness of London in the long term. Whatever decision is adopted by the Parliament of the United Kingdom in 2015, London will continue to be a competitive advantage for new York, its main competitor, because new York city residents pay the tax on the total income. The decline in prices in November, includes a price drop of 2.3% in London’s Notting Hill to property in a price range from £5 million to £10 million, This area is more dependent on the demand from buyers from the UK than other districts, which are more attractive to foreign investors.

Prices in South Kensington fell by about 1.2%.

In areas of London, Kensington, Islington and Marylebone prices fell by less than 1%. And the most popular among foreign investors in the areas of Knightsbridge, Belgravia and Mayfair prices remained neizmennym. Buyers in most cases prefer to sit on the fence, slowly making offers.

But reasonably priced property in the most sought after areas sold quickly.

® Maxim Savitsky 03.12.2014

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