It is clear that the stamp duty increase and anti avoidance measures for sales over £2m have added an element of caution says new research from Savills. Not only have the increased transaction costs needed to be absorbed, but the unknown outcome of the consultation on annual charges and other tax measures for property held in corporate structures has caused some buyers to hold back.

Certainly their prime central London index suggests a slowing in the rate of price growth, with prices in the six months to the end of September rising by just 1.2%, in prime central London, according to director of residential research Lucian Cook.  However, he says, the impact on transactions is less clear and paints a more complex picture.

Some analysts have sought to draw conclusions from sales of over £2m recorded by the Land Registry. However this is fraught with difficulty in that their reporting is often delayed and only accounts for some, not all, relevant property sales.

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Savills’ assessment of the market indicates that exchanges in the £2m – £5m market in London were down by between 20% and 25% in the second and third quarters of the year compared to the same period in 2011, but that they remained robust over £5m. Sales are being brought below the £2m threshold: the number of sales between £2.0m and £2.1m fell by 65% but those between £1.9m and £2.0m rose by 71%, the research has found.

Over £5m there is no evidence of any impact in terms of the volume of transactions, according to the new data. In the third quarter of 2012 there were around 80 sales over £5m, worth a total of about £890m across the whole London market. This compares to around 70 sales worth a total of £720m in Q3 2011.

‘As we look forward, the precise effect of the tax changes will become much clearer after the autumn statement, once wealth advisors firm up on their advice on the best way to structure a transaction and whether those already owning through a corporate vehicle should “de-envelope”,’ says Mr Cook.

‘As things stand, we believe that the measures will be the trigger for a “plateauing” of prices in 2013, before further gains are seen in 2014. This reflects the fact that tax, though important, is still just one of a series of factors that drives investment into the prime markets.’

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