Richest London Areas See First Home Price Dip Since 2009

By Patrick Gower

Photographer: Chris Ratcliffe/Bloomberg

Rows of houses stand on Lansdowne Road in the Kensington and Chelsea borough of London,... Read More

Home prices in London’s wealthiest neighborhoods fell on a monthly basis for the first time in four years as uncertainty over property taxes and national elections next year deterred buyers.
Values in the 13 neighborhoods including Chelsea and Mayfair that Knight Frank LLP defines as prime central London declined 0.2 percent in November from October, the first drop since October 2010, the broker said in a report today.
London’s luxury-home market is running out of steam after outperforming the rest of the U.K. since 2009. The opposition Labour Party plans to raise 1.2 billion pounds ($1.9 billion) from an annual tax on homes valued at more than 2 million pounds if it wins the election next year. Labour and Prime Minister David Cameron’s Conservative Party were tied with 31 percent support in a YouGov/Sun poll published Nov. 28.
“It is difficult to rank individual reasons for the decline in order of
importance, but anecdotally they appear to include the looming U.K. general election, the proposals for a mansion tax and the impact of capital gains tax reform for non-residents,” Tom Bill, head of London residential research at Knight Frank, said in the statement.
Annual price growth in the prime areas has slowed to 6.1 percent in November from a high this year of 8.1 percent in June, Knight Frank reported. The average gain for the U.K. was 8.5 percent, Nationwide Building Society said yesterday.
Buyers from Asia and the Middle East and Russia, who helped drive price growth in the central London market, are now facing a rising U.K. pound as well as series of levies imposed by Cameron’s government. The pound has strengthened 3.8 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies.