Estate agents are reporting a worrying drop in demand for prime central London property in election year as worries about the policies of the main political parties are revealed.
Political uncertainty is known to have a dampening affect on property. Only last year, Scotland saw growth stall in its property market with the electorate virtually split over the issue of independence.
Online estate agent eMove have just released data which they think shows that the prime Central London property market is now in ‘serious trouble’. Properties in this area are more likely to cost in excess of £2 million which inevitably attracts the attention of political parties attempting to appease potential voters with promises of higher taxes.
The future for owners of prime central London property could be bleak with a labour victory raising the possibility of a ‘mansion tax’. Wealthy property investors are taking note and they appear to be adopting a wait and see approach.
Demand as a percentage of properties sold versus listed, in prime central London has slumped to an average of just 11.2% according to eMove. Some areas such as St James’s have seen demand drop to zero while in Marylebone demand was a modest 6.4%.
Russell Quirk, CEO of eMove, commented “It’s clear that prime central London has been devastated where the property market is concerned. For a while now certain areas have seemed impervious to changes in the property market elsewhere in the country. However it is apparent that this is no longer the case as the capital has been brought to its knees.
I think a combination of the change in stamp duty, the potential threat of mansion tax and even to some extent the current situation in Russia, are all contributing to an instability in the prime central London property market.
We believe that by Q2 or Q3 this will be confirmed when the likes of Halifax, Nationwide and Hometrack release their latest house price indices. We also predict demand will remain low until the election is over.
If Labour don’t win then it will offer slight comfort to those looking to buy in these areas and without the fear of a mansion tax we could see demand regain some stability, but that is yet to be seen.”
Indications are that taxes and Russian billionaires may not be the only reasons why prime London property prices are falling. The global economy, having been through a turbulent period since 2008, appeared to be regaining some stability through 2014. This will have reduced the need for safe haven investments in the UK capital and seen a transfer to growth opportunities elsewhere.
Problems in the Eurozone including a potential Greek exit from the Euro may well have a positive rather than a negative influence in the next 12 months regardless of which part wins the election.
Location and property demand
St James’s 0.0%
Primrose Hill 6.5%
Maida Vale 6.7%
St Johns Wood 9.2%
Holland Park 10.1%
Belsize Park 15.9%
Notting Hill 16.1%
Posted on: February 18, 2015