The U.K. housing market showed mixed signals during 2014, after the introduction of schemes designed to make homebuying more affordable—particularly in London—piqued fears about another property bubble. Investors worried about the future of the market, hitting the number of transactions.
"Contrary to popular reporting in 2014, prime central London (PCL) has continued to show very strong price growth," said Naomi Heaton, CEO of LCP, in the report.
"PCL continues to benefit from its safe haven status in the face of global political and economic volatility. Despite being hit hard by the various taxes introduced during 2014, it continues to attract investment as one of the most globally desirable centres in the world."
Reforms to "stamp duty" on residential properties were introduced last year to make homebuying more affordable for the masses. The new rates—which came into force throughout the U.K. but were largely aimed at cooling the overpriced London market—meant that 98 percent of homebuyers paid less tax on their house, but hit buyers of properties worth over £1.5 million to a 12 percent levy.
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As a result of the changes, transactions below £1 million rose by 14 percent in London in 2014, while those over £2 million fell, according to LCP.
"The sector underneath the £1 million price point becomes increasingly attractive, untouched as it is by new taxation," said Heaton.