At the start of December, Chancellor George Osborne increased stamp duty for properties above £937,500. Following a spike in transactions before the new system came into effect on 3 December, there has been a period of tougher negotiation between buyers and vendors that in some instances has led to prices adjusting downwards slightly to account for the new higher charge.
Some sellers and buyers opted to split the difference between the old and new charges and overall there has been minimal evidence to date of deals falling through. The research stated that this indicates how likely the prime central London market is to absorb the changes in the short to medium term.
The market has reacted similarly to previous similar changes, including a rise in stamp duty to 7% from 5% for properties over £2 million in March 2012. Despite negative forecasts at the time, prices have since grown 17% in the £2 million to £5 million price bracket.
Overall, prices declined by 0.1% in December (smaller than the -0.2% registered in November) and annual growth eased to 5.1%. Though the annual rate was the lowest in five years, prices have risen 52% since the end of 2009.
