Salient to Investors:

Price gains for London’s most expensive homes have stalled this year on tax rise concerns and high asking prices.

Savills said London houses and apartments valued at more than 15 million pounds showed almost no gain in the year through September, versus a rise of 5 percent for properties from 1.8 million pounds to 5 million pounds and a rise of 10 percent for luxury residences outside central London. Values in London’s best areas increased at least 128 percent since mid-2005 versus a fall of 19.3 percent for all UK homes. Savills predicts luxury homes in central London will rise 23.1 percent through 2018, versus a 25 percent increase for British houses overall.

Lucian Cook at Savills predicts properties valued over 15 million pounds will rise at a slightly slower pace than the rest of London’s prime market and the UK as a whole, supported by a lack of supply.

Rightmove said average asking prices for homes in London rose 10.2 percent to 544,232 pounds in September and said the rate was unsustainable.

Rosalind Rowe at PricewaterhouseCoopers said a capital-gains tax on the second homes of foreign owners of UK property would generate very little income because foreign investors tend to buy at the top end of the market and hold the asset for a long time.

Liam Bailey at Knight Frank said top-tier buyers are not desperate to buy anything at any price.

Will Bax at Grosvenor Group is cautious about homes worth 5 million pounds or more because the extraordinary market for London luxury homes two years ago attracted irrational demand that has tapered slightly.

Foxtons expects no significant increase in London property sales for the rest of 2013.

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