No post-election boost for London

The much-anticipated post-election boost for the prime central London sales market has failed to materialise, new figures show.

Prices did rise 2.3% in May but that was the lowest increase in five-and-a-half years.

Pent-up demand has been released but new demand has not spiked following the election, according to new figures from Knight Frank.

It said many buyers are worried about affordability in the wider London market.

Tom Bill, head of London residential research at Knight Frank, said another key reason growth remains subdued is that the market is still absorbing increases to stamp duty for properties worth more than £1 million in December.

"The stamp duty change came on top of a series of other tax revisions including to capital gains tax and the annual tax on enveloped dwellings, all of which followed an exceptional period of growth during the financial crisis.

"It underlines how the notion of a sudden return to double-digit annual growth or any sense of business as usual' is unfounded.

"There has undeniably been a release of pent-up demand in recent weeks but while some vendors may expect an election premium', buyers have not responded in a similar way."

In the prime central London lettings market annual rental growth hit 4.2% in May, the highest rate since December 2011.

It was helped by positive economic indicators such as record employment and a buoyant business and professional services sector.

But a "stop-start" market in May meant new prospective tenants fell 12% and viewings declined 18% versus the same month last year

Prime gross rental yields increased to 2.96%.