Central London home prices drop as UK election creates uncertainty

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Prices fell slightly amid ‘a degree of caution’ in the market, Savill’s says, while a proposed tax on school fees may hit Hongkongers

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An aeriel view of London in August 2019. Photo: Reuters

Cheryl Arcibal

Published: 9:00am, 8 Jul 2024

The run-up to the UK’s election of a new Labour Party government led by Keir Starmer as prime minister has put price growth for prime properties on a pause that is likely to continue while investor’s take measure of the new government’s policies, according to Savill’s.

“Despite the short odds on a change in government and continued market activity, the general election has resulted in a degree of caution in the market, with some prime buyers opting to wait and see how the events of the next couple of weeks unfold before firming up plans,” said Frances McDonald, director of research at the London-based property consultancy.

“However, the shorter than expected run-in to the general election means there is more opportunity for buyer demand to gain traction over the autumn, once most of the uncertainty is behind us.”

Meanwhile, the new government’s plan to introduce a value-added tax (VAT) on private school fees could have a significant impact on Hongkongers who send their children to study in the UK.

Prices in prime central London dropped 0.4 per cent in the second quarter, compared with the first quarter, and 0.9 per cent year on year, according to the property consultancy. That is among the biggest declines in all of the British capital’s districts and represents an average decrease of £20,000 (US$25,627) in value over the past three months for a property worth £5 million.

Price movements in other prime districts of London ranged from a 0.3 per cent slide to a 0.5 per cent rise quarter on quarter, and from a 1 per cent decline to a 0.8 per cent rise year on year.