Executive Summary
- Sales of London homes valued at £5 million or more dropped by 65% in October, according to data from LonRes.
- The sharp decline is attributed to buyer uncertainty over potential tax changes, including a possible “mansion tax,” in the upcoming Budget.
- The average price for a home in London fell by 5.8% year-over-year, the largest annual decrease since February 2024.
- The broader UK housing market also showed signs of cooling, with surveyors reporting a fall in buyer demand and sales activity nationwide.
Sales of high-end homes in London experienced a significant downturn last month, as market uncertainty grew ahead of the upcoming government Budget. According to new data from property analyst LonRes, sales of homes valued at £5 million or more plummeted by 65% in October, reflecting widespread buyer hesitancy over potential tax policy changes.
The report from LonRes also highlighted other signs of a cooling market in the capital. New sales instructions saw a decrease of nearly 19%, while the number of homes listed for sale increased by 15.6%. This shift contributed to a 5.8% year-over-year decline in the average London home price for October, which marks the most substantial annual decrease recorded since February 2024.
Market analysts attribute the slowdown to speculation that the Chancellor, Rachel Reeves, may introduce new property taxes. Anthony Payne, CEO of LonRes, stated that the market was already facing challenges, but activity stalled after proposals were floated. “As soon as she started flying some kites, everybody was taken by surprise, like a rabbit in headlights, and everybody just stopped,” he commented.
The primary concerns for buyers and sellers are reports of a potential “mansion tax” on properties worth over £1.5 million and a possible doubling of council tax rates for homes in the highest bands. These concerns are compounded by last year’s crackdown on non-domiciled residents, which has also impacted the top end of the market.
Findings from other industry sources, including estate agent Knight Frank, support this trend, indicating that fears of new property taxes have pushed down prices for London’s most expensive homes at the fastest rate in over four years. Nick Gregori, head of research at LonRes, described the city’s luxury housing market as “fragile,” noting that persistently high borrowing costs and the prospect of an income tax rise have further eroded buyer confidence.
This trend is not isolated to London. A broader report from the Royal Institution of Chartered Surveyors (RICS) indicated that the UK’s housing market as a whole cooled in October, with buyer demand, sales activity, and new instructions all showing negative growth. The combination of these factors continues to place significant pressure on the property market across the country.
