Central London house prices fall as UK election raises uncertainty

Preparations for Great Britain choice According to Savills, the decision by the new Labour government led by Keir Starmer as prime minister has halted the growth of luxury property prices, a rise that is likely to continue until investors assess the new government’s policies.

“Despite the slim chances of a change of government and continued market activity, the general election has caused some caution in the market, with some major buyers opting to wait and see how events unfold over the next few weeks before making any final decisions,” said Frances McDonald, research director at the London-based property consultancy.

“However, the shorter-than-expected run-up to the general election means there is more chance of demand picking up from shoppers in the autumn, once most of the uncertainty is behind us.”

Meanwhile, the new government’s plan to introduce value-added tax (VAT) on private school fees could have a significant impact on Hong Kong residents who send their children to school. Great Britain.

Prices in prime central London districts fell 0.4% in the second quarter from the first and 0.9% year-on-year, according to the property consultancy. That is one of the biggest falls across all districts in the British capital and means an average drop of £20,000 ($25,627) in value over the past three months for a property worth £5 million.

Prices in other major London boroughs ranged from a quarterly fall of 0.3% to a quarterly rise of 0.5%, and from a year-on-year fall of 1% to a year-on-year rise of 0.8%.

Outside London, prices fell 0.4% in the quarter and 2.7% for the year, Savills added. These markets saw the strongest growth during the mini-property boom in 2020 and 2021.

Apart from the new government, interest rates are also a factor causing hesitation among potential buyers on stock markets.

“With everyone waiting and expecting interest rates to fall, investors are using this time to carefully look for the right investment to jump into when the market turns for the better,” said Adrian Lim, head of international residential sales at Savills Singapore. “Discerning investors are just being cautious and want to make sure they get the best deal.”

VAT on private school fees would be the next major change in UK tax policy following a recent overhaul of the tax system for non-domiciles. The new system, due to come into effect in April, will no longer exempt non-domicile UK residents from paying tax on income and assets elsewhere in the world.

The number of Hong Kong students studying in private schools in the UK fell by about 4.2 per cent to 7,677 in January from a peak of 8,011 a year earlier, according to a study published in May by the Council of Independent Schools in the UK.

As Savills notes, the proposed tax could lead to an increase in the prices of houses located near prestigious state schools.