London is experiencing some BUYER-BLUES on the very high end and today its reported that home-price gains in London’s most-expensive neighborhoods are trailing the rest of the city because buyers are deterred by high asking prices and the possibility of new taxes. Values in prime central London rose 8.1% in the 12 months through June, yet home prices in the entire city jumped 26% in the second quarter from a year earlier, the biggest gain in 27 years: does this mirror what is happening here in Manhattan versus Brooklyn? At what point do price large gains cause buyers to become increasingly nervous that this is either unsustainable or unaffordable?
London’s Mayfair and Chelsea have risen by more than 70% since the 2009 GREAT RECESSION. Next year a capital-gains tax on homes sold by people living abroad is further dampening spirits and the Labour Party wants to implement an annual tax on homes worth more than 2 million pounds. Apartments and houses valued at less than 2 million pounds increased by about 14% in the 12 months through June, while those 10 million pounds or more climbed 3.5%.
Soon we will discover whether BUYER-BLUES are:
1) Frustration at limited inventory and choices.
2) Resistance to pricing out of concerns of a bubble.
3) Exhaustion at being unable to meet unrealistic expectations.
4) A realization that their incomes have not kept apace with housing inflation.
5) A pause to catch your breath.
6) Anger that they keep being out-bid by all cash buyers.