Prime London property prices fall most in 7 years

Britain’s vote to quit the EU helped push down house prices in London’s most expensive areas at their fastest rate in nearly seven years, accelerating a downward trend caused by increases in property taxes, a consultancy said yesterday.

Knight Frank’s prime central London index fell 1.5% last month from a year earlier, due to uncertainty created by the June 23 referendum and property tax rises which pushed up buyers’ costs and brought sales forward to the start of 2016.

It is the latest sign of a possible slowdown in Britain after a closely watched survey yesterday showed Britain’s economy is shrinking at its fastest rate since the financial crisis.

Commercial property took the biggest hit in the wake of the EU referendum with investors pulling out money from funds, forcing some to be suspended.

But there have also been warnings in recent weeks from housebuilders and estate agents that residential property prices and demand could suffer.

“Since the vote, a number of buyers have requested discounts due to the climate of political and economic uncertainty,” Knight Frank’s head of London residential research, Tom Bill, said.

“The decision to leave the European Union has provided a backdrop of short-term uncertainty that is affecting behaviour in the prime central London property market.”

But he said the primary reason for the decline was changes to stamp duty, a property tax, which raised the amount paid on the most expensive properties and on second homes and buy-to-let investments although Brexit added to the effect.

In Knightsbridge, prices fell 7.3% last month, the biggest drop of any of the 15 areas examined.