London's luxury property market has cooled as concerns grow over potential tax increases under Britain's new centre-left government, a property data firm reported

on Tuesday.

According to LonRes, sales of high-end homes in prime areas of central London dropped by 7.5% compared to the same period last year, while new property listings increased by 8.1%. The average sale price for these exclusive properties also fell, down 4.2% year-on-year.

The brief post-election surge in the housing market in July was quickly dampened by concerns over possible tax hikes, with the focus now on Labour finance minister Rachel Reeves' upcoming budget announcement on October 30, said Nick Gregori, head of research at LonRes.

Gregori pointed out that worries are particularly heightened at the upper end of the market, driven by fears over potential changes to "non-dom" tax rules and other tax reforms. These concerns stem from a previous Conservative government decision in March to end certain tax breaks on overseas income for wealthy individuals.

Prime Minister Keir Starmer heightened speculation about increased taxes on the wealthy when he mentioned that the budget would be "painful" and that "those with broader shoulders should bear the heavier burden."

Gregori added that while some estate agents noted strong interest from foreign buyers, others indicated that some international residents were considering selling their properties. Photo by Paul Farmer, Wikimedia commons.