Homes at the very top of London’s property market are now selling for an average of 10% below their asking price, new research suggests, as prices in prime central London continue to slide.
According to research from Coutts, reported today, prices in the highest end of the London market are now 14% below their 2014 peak, with properties in areas including Mayfair, Belgravia and Knightsbridge changing hands at a significant discount to what sellers originally asked. Some owners are facing losses of hundreds of thousands or even millions of pounds.
Knightsbridge and Belgravia have seen the steepest falls, with prices 30.8% below peak levels, while South Kensington has seen values drop 26.9% from their highest point. The falls have been attributed to Brexit, the Covid pandemic, increased property taxes and higher borrowing costs.
Alex Webster, head of lending at Coutts, said buyers and sellers at the top end of the market were taking a more cautious approach, even before the Chancellor’s first budget this week. She noted that financing conditions and the wider economic environment would continue to influence the market.
A quieter market
Activity has cooled sharply. New listings in prime central London fell 14% compared with the previous quarter, with available stock down 6% year-on-year. Transactions were 9.1% lower in the third quarter, with the biggest slowdown in the £2 million to £5 million band, where transactions dropped 22.3%.
Buying and selling agents have reported reduced interest from foreign-born buyers following the abolition of the non-dom tax regime. The UK property market shows resilience despite negative sentiment in some segments, though prime central London appears particularly affected.
Meanwhile, the Bank of England has maintained its base rate at 3.75%, though volatility in the bond market has driven up swap rates that influence fixed-rate mortgage pricing. Market expectations suggest the monetary policy committee may vote to increase the rate to 4% next week for the first time in three years, which could further affect house price growth.
The very top end holds up
Separate research from estate agent Savills found that buyers at the very top end of the market continue to drive activity, with 26 transactions above £10 million in the third quarter. Over the past year, 127 transactions above this threshold have completed, with a combined value of £2.88 billion.
The divergence between the mid-to-upper prime market and ultra-high-end transactions suggests that while the broader prime central London market faces headwinds, the very top tier remains relatively insulated from the pricing pressures affecting properties below the £10 million threshold.
For buyers, the figures point to room for negotiation in the prime market — but with borrowing costs uncertain and further tax changes possible, the research suggests caution on both sides of the deal. For context on the wider London market, see our reporting on London house prices and Kensington and Chelsea as London’s least affordable borough, as well as this week’s mansion tax explainer.
