London House Prices Dip as Election Concerns Hit Market

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U.K. House Prices
In London, the top end of the market may revive as the election ended speculation of a so-called Mansion Tax on the most-expensive homes. Photographer: Matthew Lloyd/Bloomberg

Asking prices for London homes fell the most in nine months in May as concern about potential property-tax changes before the election cooled demand.

Prices dropped 2.3 percent from April -- led by top-priced Kensington and Chelsea -- and were up 1.5 percent from a year earlier, property website operator Rightmove said on Monday. That’s the smallest annual gain in more than four years. Nationally, prices slipped 0.1 percent, the first decline in a May since the last general election in 2010.

Concerns in the run-up to the election surrounding housing policy proposals -- particularly those put forward by the opposition Labour Party -- unnerved buyers and caused fewer homes to be put on the market, Rightmove said. A pickup is now likely after the Conservative Party’s victory removed threats including a potential tax on the most expensive homes.

“Pre-election jitters finally came home to roost in the final weeks of electioneering,” said Rightmove director Miles Shipside. “This is an election-driven price stall which gives some buyers only short-term relief from the backdrop of a long-term housing shortage.”

The average asking price for a home in London is now 581,074 pounds ($915,800), according to Rightmove. Nationally, the average is 285,891 pounds.

Rightmove said there was a 17 percent jump in new properties coming to market in the U.K. after the May 2010 election and this could be replicated after the May 7 vote delivered a conclusive result.

In London’s most expensive districts, prices plunged 6.3 percent this month to 1.44 million pounds, according to the report. That’s a 7.4 percent drop from a year ago.

“Election uncertainty and particularly the threats of financial penalties to non-doms, landlords and those with properties valued at over two million pounds put a brake on the market,” Shipside said. “Their removal gives a reason for a rebound in activity and prices.”

Including London, three of 10 regions tracked by Rightmove showed declines on the month. The 1.4 percent gain in the East of England led increases in the seven remaining areas.

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