Caution persists in London’s prime property market after Budget hit
A tense political and economic environment has left buyers of prime property cautious in the last few months of the year, with prices dipping in central London.
House prices in Knightsbridge and Belgravia fell by two per cent and 1.5 per cent, respectively, while prices fell 0.8 per cent across the capital as a whole, according to new data from Savills.
The immediate impact of the new government’s first Budget has been felt in locations “with the highest concentrations of wealth, and a more international buyer base,” Savills said.
Prime central London prices have fallen by more than 20 per cent since their 2014 peak.
“The cautious mentality that we observed ahead of this summer’s general election and the Autumn Budget has persisted across prime markets as the year draws to a close, although properties continue to sell where they are priced competitively,” says Lucian Cook, head of residential research at Savills.
“Generally, needs-based buyers have underpinned market activity post-Budget, as they have benefited from relatively stable mortgage rates and the prospect of further base rate cuts in 2025. As a result, these sub-markets have been the strongest performers in London.
Cook said that significant new changes to tax law in the UK, like the winding down of the ‘non-doms’ tax regime and the new stamp duty surcharge for second homes have created a “challenging” market.
Savills expects prime central London values to fall by four per cent in 2025 as the market “finds its level in a changed fiscal and regulatory environment”.
The data closes off a tricky year for prime houses.
2024 has been marked by repeated times of uncertainty in the market, with fears over changes to the non-dom regime in the spring budget quickly followed by election uncertainty in July, plus pre- (and post) autumn budget jitters.
However, next year should bring fewer tax and regulatory surprises, with most – if not all – significant tax changes already announced in the Autumn budget.