Political uncertainty over 2015 election hits central London prime property market
Demand in the prime central London residential property market has become more restrained against a backdrop of heightened uncertainty due to next year’s general election, according to a new analysis.
Prices in this sector fell by 0.2% in November, which was the first drop since October 2010 and meant annual growth eased to 6.1%, the report from real estate firm Knight Frank shows.
Discounting a minor dip in the second half of 2010 due to concerns over the euro zone, November marked the end of a run of growth that lasted five and a half years, during which time prices have increased by 73%.
According to Tom Bill, Knight Frank’s head of London residential research, it is difficult to rank individual reasons for the decline in order of importance, but anecdotally they appear to include the looming UK general election, the proposals for a mansion tax and the impact of capital gains tax reform for non-residents.
‘The conclusion must be that prices have softened in prime central London due to the magnitude of the cumulative uncertainty rather than the quantifiable extent of the risks. However, short term or domestic risks don’t obscure London’s wider appeal,’ he said.
‘Whatever happens in 2015, for example, London will retain a competitive advantage versus New York, where residents are taxed on their global income. Neither should buyers overlook the long-term potential for price performance of prime central London property which, as the graph above shows, has been exceptionally strong through past elections,’ he added.
The report also shows that price declines in November included a 2.3% fall in Notting Hill, due to weaker demand in the £5 million to £10 million price bracket, a family house market that is more reliant on domestic demand than other areas of central London.
Elsewhere, prices in South Kensington fell 1.2%. Bill explained that although more buyers are adopting a wait and see approach to pricing, the most in-demand and well-priced properties are selling quickly.
There were declines of less than 1% in Kensington, Islington and Marylebone, while prices were flat in the three golden postcodes of Belgravia, Knightsbridge and Mayfair.