Prime London house prices underperform wider property market under Labour
The prime London housing market has risen by less than the wider housing market since last June, despite the sector’s usual strong performance under Labour.
Since July of last year, the average London house price has fallen by 0.5 per cent, according to Benham and Reeves.
House prices across Kensington and Chelsea, meanwhile, have plummeted by 14.6 per cent, while house prices in Hammersmith and Fulham have dropped by 12.4 per cent.
“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,” director of Benham and Reeves, Marc von Grundherr, said.
“Whilst the prime London market wasn’t performing particularly well in the lead up to last July’s election, [it] accelerated the decline… 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,” von Grundherr said.
Jonathan Hopper, CEO of Garrington Asset Management, pointed out that an exodus of millionaires from London has also affected the market.
“Rising taxation and political uncertainty have led many wealthy UK residents to reassess their presence here, and a rapid recalibration of London’s prime property market is underway,” he said.
Prime lettings boom while sales stall
Hopper said that despite the weakness in the prime sales market, the lettings market has remained strong.
“Prime rental values in London are now a third higher than their pre-pandemic average, and while our high and ultra-high net worth clients may have lost faith in the current government’s fiscal direction, their faith in prime UK property as a reliable, long-term asset remains as strong as ever,” Hopper said.
Renters have been increasingly attracted to London by the flexibility and quality of service it provides, particularly amid changing attitudes toward the UK as a place for the world’s wealthiest to settle.
Data from Lonres shows that the average rent agreed on flats in prime central London surged by 7.9 per cent in the first three months of 2025 compared to the last quarter of 2024.
Average rental values of prime central London flats are now 11.3 per cent higher than they were a year ago.