London luxury-home sales slumped in summer to lowest since 2008

Luxury residential properties are seen in Knightsbridge in London, UK.
Luxury residential properties are seen in Knightsbridge in London, UK. PHOTO: BLOOMBERG

LONDON (BLOOMBERG) - Luxury homes in London are proving the toughest sell since the global financial crisis as higher taxes continue to damp demand.

In the city's prime central districts such as Notting Hill and Knightsbridge, 814 existing homes sold in the three months through August, a 15 per cent decline from a year earlier and the lowest for the summer since 2008, according to broker Huntly Hooper Ltd. The average price fell 4.4 per cent in August from a year earlier to £1,426 (S$3,103) a square foot.

Sales of luxury homes have been stymied since Chancellor of the Exchequer George Osborne increased the stamp duty sales tax for the most expensive homes in December. The tax escalates to 12 per cent on every pound a buyer spends above £1.5 million, with the purchaser of a £5 million home paying £513,750 in duty, almost £164,000 more than before.

"Buyers are looking for options where they can enhance value through refurbishment to get back some of the costs associated with buying," Mr Hooper said. "It's a much more level playing field between buyers and sellers."

Prices fell 4.6 per cent in Notting Hill and 2.4 per cent in Knightsbridge in the year through August, according to broker Knight Frank LLP.