Prime central London property values suffering under Labour

Research by London lettings and estate agent, Benham and Reeves, has shown that London is just one of two regions where house prices have fallen since Labour came into power and it’s the prime London market that has seen the largest decline when it comes to the rate at which property values are depreciating.

Benham and Reeves analysed the latest house price data looking at how the market has performed since Labour took power in July of last year (July 24 to Feb 25 – latest available), as well as how house prices have performed when compared to the same time period prior to Labour’s election victory (Nov 23 to Jun 24).

The figures show that, as a whole, a new dawn of political certainty has had a positive impact on UK house prices.

Since July of last year, the average UK house price has increased by 1.9%. When compared to the same time period prior to Labour’s election win, the average UK house price had increased by just 0.7%, meaning that the market has improved to the tune of 1.2% since July’s election.

This has been the case almost across the board when breaking the market down on a regional level, with the East Midlands and North East seeing the rate of house price growth strengthen to the greatest degree since Labour took power.

However, two regions have seen property values decline since Labour won the election. In Scotland, house prices have fallen by -0.2% since July versus a 1.3% rate of growth over the same time period prior to the election.

In London, house prices have also declined by-0.5% versus a 1.4% increase before Labour took power.

A further analysis of the market at local authority level, conducted by Benham and Reeves, shows that it’s the prime London market that has seen the greatest decline in property values under the new Labour Government.

Since July, house prices across Kensington and Chelsea have plummeted by 14.6% versus a decline of just -19.% over the eight months prior.

Across Hammersmith and Fulham, house prices fell by -6.6% in the eight months leading up to the election, but this rate of decline has accelerated to -12.4% since.

In Westminster house prices have fallen by -8% under Labour versus a -1.1% decline prior to the election, whilst in Camden property values are down by -7.2%, reversing the 1.7% increase seen in the eight months before the election.

The City of London is the only prime central London borough that hasn’t seen house prices suffer under Labour, as having fallen by -1.7% in the lead up to the election, they’ve since climbed by 1.2%.

Director of Benham and Reeves, Marc von Grundherr, commented

“2024 was a year of greater stability for the UK property market and, on the whole, this positive market momentum has continued since Labour came into power in July of last year.
It’s fair to say that they haven’t done much at all to help stimulate the market, however, it’s clear that a settling of the political landscape has helped to boost buyer confidence and this has helped to drive the levels of positive house price growth being seen.

However, the prime London market is a very different beast compared to the rest of London, let alone the UK, and it’s clear that the new Labour Government has had a significant impact on prime London property values.

This is no doubt due to a range of factors, from failing to extend stamp duty relief thresholds, to freezing inheritance tax thresholds and, most significantly, changes to the non-dom tax regime.

So whilst the prime London market wasn’t performing particularly well in the lead up to last July’s election, it’s clear that the result of said election has drastically accelerated the decline being seen across London’s high-end housing market.

Of course, this presents a great opportunity for prime London buyers at present, as with further rate cuts on the horizon, we expect the market to settle and values to strengthen over the remainder of the year.”