UK election sparked slowdown in prime London sales

Value of property deals most desirable central London postcodes in June fell by 4.5 per cent

A cyclist passes the One Hyde Park, residential and retail complex in Knightsbridge, London. Getty Images

The UK’s summer election led to a slowing of sales of prime London property, research has shown.

The value of sales in the most desirable central London postcodes in June fell by 4.5 per cent, compared to a year earlier, and there were 17 per cent fewer transactions over the same period.

The number of new homes on the market – also called new instructions – also fell in the month, by 8.4 per cent on an annual basis. But they remain 4.8 per cent higher than the 2017-19 pre-pandemic average.

Nick Gregori, head of research for LonRes, said activity in the prime market was down on “all main metrics”, adding that demand for more expensive homes appears to be falling faster.

“We know many buyers and sellers are playing a waiting game – mainly hoping for better economic news and political stability – and the general election campaign is likely to have added to this sense of caution,” he said.

Now that the election is over, the stability point has been dealt with, he said.

And if the markets’ response is anything to go by, having a government with a large majority could increase confidence, overriding worries about taxes and regulation.

“This raises hope that the impact of an early summer slowdown can be caught up later, but sentiment across the wider international stage remains fragile,” added Mr Gregori.

Both the wider prime market and £5 million-plus ($6.4 million) sector are undergoing similar trends on the supply side, with a rise in new instructions.

“Demand for more expensive homes appears to be falling faster but this is more to do with the recent strength of this market,” he said, adding that sales of property worth more than £5 million were 10 per cent lower than last year but still more than a quarter above their 2017-2019 benchmark.

The data showed that prime London rental growth also slowed in June, with an annual rise of only 0.4 per cent, the slowest since July 2021. However, rents remain 28.1 per cent above their 2017-2019 pre-pandemic average.

There was also an annual decrease of 2.5 per cent in lets agreed, with a 5.1 per cent fall in new instructions.

“Lettings also had a quiet month after a strong start to the year,” said Mr Gregori.

“A lack of stock at more affordable price points continues to constrain activity across the market, although more choice is appearing at the top end. Annual rental growth slowed to 0.4 per cent but values remain 28.1 per cent above their 2017-2019 [pre-pandemic] level.”

Prime estate agents agree a period of stability as a result of Labour’s large majority should benefit the property market, unless the party chooses to introduce capital gains tax on principle residences.

“This would have disastrous consequences and serve only to further inflate the existing rental market,” said Mark Pollack, co-founding director of Aston Chase.

The party’s plans to abolish the non-doms tax regime would serve the prime property market a further blow, he added.

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“We fear this will prove to be a huge own goal for the UK and particularly damaging to the London economy. Inevitably, it will result in a glut of super-prime properties coming to the open market or being discreetly offered for sale which, in turn, will soften prices for these properties and inevitably, in due course, ripple down the market.”