(Bloomberg) -- London’s luxury home sellers are increasingly resorting to discounts to lure buyers concerned about the prospect of tougher wealth taxes in the new Labour government’s budget on Oct. 30.
The number of price reductions on £5 million ($6.5 million)-plus homes rose 39% between July and September from a year earlier, according to a report by researcher LonRes. That’s 174% higher than the third quarter average between 2017 and 2019 — a three-month period typically associated with a summer slowdown in sales.
“The darker clouds on the horizon are provided by the looming budget,” said Nick Gregori, head of research at LonRes. “Negativity and uncertainty combined are not a recipe for strong activity in a discretionary market.”
London’s luxury home deals have slumped in 2024, partly down to fears about the potential for reforms affecting wealthy UK residents officially domiciled overseas, or “non-doms.” Over the past year, some mansion sellers have resorted to discounts of around 30%, including a £23.5 million home in Belgravia that was purchased for £34 million about a decade earlier.
New sale instructions for homes priced at £5 million or higher rose 32% year-on-year between July and September, some 87% higher than the third quarter average between 2017 and 2019. The number of properties hitting the market in this price band rose 28% year-on—year at the end of last month, according to the report.
Homes under offer in September were 38.5% lower over the same period, with sales down 21% over the quarter compared with a year earlier. LonRes said buyers are waiting for the outcome of the budget, while sellers have decided to put their homes on the market regardless.
Still, homes under offer across the wider prime London market grew strongly in September, suggesting rising sales in the months ahead. While the top end of the market has been impacted the most by weak sentiment, activity was always likely to fall back from the high levels recorded in 2021-22, LonRes said, and vendors could be spared further damage if the budget is more lenient than expected on the rich.
“Compared to a month ago, the expected tax changes that would be considered unhelpful for the prime London property market seem less certain to be introduced,” LonRes’ Gregori said. However, “the general messaging around the national finances and the required fixes remains negative,” he added.
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