Prime central London’s luxury property market is experiencing significant contraction, with eight of every 10 homes in prestigious areas such as Mayfair, Belgravia and Knightsbridge selling below their asking prices, research from Coutts reveals. The market has seen prices decline 5% during the third quarter, marking a substantial pullback in the sector that typically serves the nation’s wealthiest residents.
Properties in London’s highest-value postcodes are now selling at an average 10% discount to their list price, resulting in substantial losses for affluent homeowners. Some neighbourhoods have been hit particularly hard, with South Kensington and Belgravia experiencing price declines of 26.9% and 30.8% respectively from their previous peaks. Overall, prices across prime central London remain 14% below their 2014 peak, having been affected by multiple economic headwinds including Brexit, the Covid pandemic, elevated property taxes and climbing borrowing costs. The removal of the non-dom tax regime has also reduced foreign buyer interest, according to agents working in the capital.
Seller activity has contracted sharply, with new listings dropping 14% compared to the preceding quarter and available inventory declining 6% year-on-year. Transactions fell 9.1% during the third quarter, with the steepest decline occurring in the £2m-£5m segment, which saw transactions plunge 22.3%. Market participants are adopting a cautious stance while monitoring recent developments, including the chancellor’s latest budget announcement.
Despite the broader slowdown, the ultra-premium segment above £10m continues to show resilience. Savills data indicates 26 transactions exceeding £10m occurred during the third quarter alone, bringing the annual total to 127 transactions in that price range, collectively valued at £2.88bn. The divergence suggests demand remains concentrated at the very top of the market while mid-range luxury properties struggle to attract buyers.
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