London’s prime property market is set for another summer of uncertainty as speculation mounts over tax changes under a Burnham government, Knight Frank warns.
The agency says questions over Andy Burnham’s plans if he takes the helm as Prime Minister could weigh on sentiment.
Average prices in prime central London fell by 3.6% in the year to June, unchanged from the previous month, it found.
Transaction volumes in prime central London were 14% lower in the year to June compared with the previous 12 months, while the number of offers submitted was down by 4%.
The prime outer London market proved more resilient, with prices falling by 0.4% annually and transactions declining by 7%, while the number of offers rose by 5%.
Knight Frank head of UK residential research Tom Bill says: “Andy Burnham’s first speech as Prime Minister-in-waiting last week could afford to be uplifting and ambitious.
“It was light on detail for someone who has craved the top job for years, but during this period of limbo between Prime Ministers, fiscal reality can take a back seat.
“Plans affecting the property market may include aligning capital gains and income tax, a land value tax to replace stamp duty and council tax and the biggest programme of social housebuilding since the Second World War.
“There are also questions around devolved tax-raising powers.”
Bill says that seeing Burnham’s comments so far as anything other than a wish list would be premature, “particularly in light of Labour’s unachievable manifesto plan to build 1.5 million homes”.
However, he says: “For the prime London property market, it signals another summer of speculation ahead of the autumn Budget.
“With the government seemingly unable to cut spending meaningfully or introduce broad-based tax rises, we could see a repeat of last year’s smorgasbord approach of smaller wealth-based rises like the higher-value council tax.”
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