Knightsbridge is the worst performing housing market in central London this year as rising taxes curb valuations in the district that’s home to the Harrods department store.
Prices fell 6.1 percent as an increase in the stamp duty charge damped demand and sales volumes fell, according to Rupert des Forges, a partner at broker Knight Frank LLP. The decline compares with an overall gain of 1 percent for the 14 districts that make up prime central London, the broker said in a report on Monday
Knightsbridge “was probably at its most frothy when the market turned,” Des Forges said in a telephone interview. From March 2014, “a lot of asking prices were beginning to get very disconnected from transactional levels,” he said.
The higher stamp duty rates, which climb to as much as 12 percent of the cost of the most expensive homes, will rise again next year for landlords and buyers of second homes. Demand for the U.K. capital’s best homes has also been hit by the decline in the value of the ruble, falling oil prices and lending restrictions in countries such as Singapore.
“Double-digit annual price growth is unlikely to return in the short term” in London’s priciest districts, Tom Bill, head of London residential research at Knight Frank, wrote in the report. “The prevailing mood is one of caution.”
The number of properties withdrawn from sale in the city’s best neighborhoods rose 12 percent from April through November compared with a year earlier, the broker said.