Categories
NEWS: The London Boroughs Climbing in Value Despite Property Slump
London’s property market shows a tale of two cities in 2025, with some areas witnessing unprecedented growth while others reveal steep declines.
Against a backdrop of economic uncertainty, the market is offering unique opportunities for buyers, driven by notable price adjustments, increased supply, and shifting buyer preferences.
Several areas in London have seen a resurgence in property values this year:
- Wandsworth emerged as a top performer, with prices rising 2.6% annually by March 2024 and accelerating to 2.9% growth in the final quarter. Prices in Battersea, Clapham, and Wandsworth are now just 0.1% below their all-time peak.
- Hackney and Victoria Park also made gains, with annual price growth of 6.3% and 5.1%. This growth was particularly pronounced in house purchases, which saw a 5.3% increase compared to 1.3% for flats.
- Bexley saw a 5.1% rise in residential property values, demonstrating resilience in outer London.
Skip to:
Prime Central London Market Forecast 2025
Shining a Light on the Buy to Let Market
Why It's So Popular to Invest in London Property
Prime Central London Market Forecast 2025
In the ever-evolving landscape of global property markets, few markets command the prestige of Prime Central London (PCL). Central London contains some of the world's most coveted addresses and has long captivated the imaginations of discerning investors and affluent individuals.
Nestled within the heart of one of the world's most vibrant and cosmopolitan cities, the PCL market stands as a testament to London's enduring allure. From the stately grandeur of Mayfair and Belgravia to the chic sophistication of Knightsbridge and Chelsea.
Amidst broader economic challenges, the PCL market continues to demonstrate its strength, positioning itself for potential growth. Every market is prone to fluctuations, however, so we're here to discuss to potential for investment. Here is our prime central London property market forecast – what lays ahead and why the PCL market so often endures.
According to the latest industry forecasts, the PCL market is expected to outpace other prime residential markets in the UK over the next few years.
Market Sentiment
Buyer and seller sentiment has improved compared to earlier in 2024. According to a survey by Savills:
- 54% remain committed to moving within the next six months, signalling optimism for a healthy spring market.
- Interest in properties between £1 million and £5 million has surged, with Shepherd Market accounting for 50% of sales in this range.
Despite these positive indicators, a supply-demand imbalance does persist, much like in the wider UK housing market.
Uncertainty following the Autumn Budget and high construction costs are deterring buyers from purchasing refurbishment projects in Prime Central London. In response, a limited number of “best-in-class” properties in the £5 - 10m range are driving competition.
But as always, record prices are still being achieved at prestigious addresses like Grosvenor Square, Mount Street, and Charles Street. When it comes to Prime Central London, the appetite for luxury homes is never dulled for long.
It's A Buyer's Market (For Now)
While some areas shine, others have seen prices retreat, creating opportunities for buyers to negotiate discounts. Across Prime Central London (PCL), 79% of properties sold below asking price in Q3 of 2024, with discounts averaging 8.6%.
- Chelsea: Discounts average 11.3%, with 92% of properties selling below asking price.
- Mayfair & St James’s: Buyers are securing the largest discounts, averaging 13.8%, while prices remain 23.7% below their peak.
- Hampstead & Highgate: Prices have dropped 17% from their Q2 2023 peak, including a 9.6% decline over the past year.
- Knightsbridge & Belgravia: Prices are 23.1% below their height, following a 5.6% quarterly drop.
- Transaction volumes are a bright spot, up 7.2% from the previous quarter and 14% higher than the 10-year average, particularly in the £2 million to £5 million range.
Neighborhood Spotlights
St John’s Wood, Regent’s Park & Primrose Hill: Six super-prime properties sold in the last quarter, leading activity in the £10 million+ bracket.
Belgravia: The area has transformed into a desirable destination, attracting tenants and buyers seeking luxury and modernized living.
Kensington, Notting Hill & Holland Park: Sales activity is robust, with volumes up 21.4% annually.
Challenges Ahead
Changes to the “non-doms” tax policy brought forward in 2024's Autumn Budget, paired with global economic concerns have weighed on buyer sentiment.
But with the promise of a vibrant spring market and strong international interest, London’s prime property sector is poised for a pivotal year ahead.
See similar: The Best Areas in Prime Central London for High-End Property Investment
Shining a Light on the Buy to Let Market
Demand for housing in the capital remains strong, with corporate expats, diplomats, and students driving competition. However, the Renters’ Rights Bill and economic uncertainty have shaken landlord confidence.
Longer tenancies and higher renewal rates point to market stability, but rent increases are muted as tenants shop around.
Some landlords are modernizing properties to achieve rents 20–30% higher upon relaunch, while others withdraw properties from the market to avoid unfavourable conditions.
When it comes to the rental market, London landlords are certain on one thing: it's getting more expensive to own a rental portfolio. This is undoubtedly going to have a knock-on effect on tenants, as rent will reach a ceiling of what both tenant and landlord can afford.
Some landlords are exiting the market in response to the current challenges, while those with more assets will likely weather the storm. It's worth mentioning that when it comes to Prime Central London, landlords may not necessarily rely on monthly rent as their primary source of income.
This leads to a stand-off between tenants getting priced out of a property and landlords wanting to preserve their margins. Investors with a portfolio in Prime Central London likely have more flexibility to wait for a tenant who can match their rent because they may not be relying on rental income.
It's not an easy market, but here are some of the reasons that the rental market is so competitive:
Influx of Affluent Professionals
London's status as a global financial hub and a thriving center for various industries continues to attract affluent professionals from around the world. These high-earning individuals seek the prestige and convenience of residing in prime central locations, driving demand for luxury rental accommodations in PCL. However, shifts in economic conditions, industry trends, and global mobility patterns can influence the influx of such professionals.
International Tenant Base
The PCL market's global appeal extends beyond buyers, attracting a diverse international tenant base. London's cosmopolitan allure, world-class amenities, and cultural richness make it a highly desirable destination for affluent expatriates and temporary residents from across the globe. Nevertheless, geopolitical factors, travel restrictions, and changes in personal preferences can impact the flow of international tenants.
Limited Rental Supply
The constrained supply of rental properties in PCL, coupled with strong demand from both domestic and international tenants, creates a favourable supply-demand dynamic that supports robust rental growth in the sector. However, this dynamic can be influenced by changes in development trends, planning regulations, and overall market conditions.
Case study: Our case study below explores how we secured a buy to let mortgage in London for a non-dom foreign national
Why It's So Popular to Invest in London Property
The Prime Central London (PCL) property market has demonstrated resilience amidst broader market fluctuations, underpinned by several key factors
- Limited Supply and Global Appeal - Limited Supply and Global Appeal - The constrained supply of properties in prime central locations, coupled with London's enduring global allure, continues to attract affluent domestic and international buyers and investors. However, it's important to note that this demand can be influenced by economic conditions and geopolitical factors.
- Cash Buyer Dominance - In 2023, cash buyers played a significant role in the PCL market, accounting for 76% of sales. This substantial presence of cash buyers has provided insulation from the impact of higher mortgage rates, contributing to market stability. Nevertheless, cash buyer activity can be affected by broader economic conditions and personal wealth factors.
- Room for Growth - While PCL prices are still 17% below their 2015 peak, suggesting potential for growth as the market recovers from the pandemic and economic uncertainty, it's crucial to exercise caution and carefully evaluate the risks and opportunities involved.
- Repricing Nearing Completion - The market has largely re-priced itself, with annual price falls of just 0.8% in 2023, indicating that it may be approaching a bottom and poised for a potential resurgence. However, market conditions can change, and investors should remain vigilant and adaptable.
While the PCL sector's global status, supply constraints, and affluent cash-buyer pool may underpin its relative outperformance over the next five years, it's important to approach investments with prudence and a thorough understanding of the risks involved. Economic uncertainties, geopolitical tensions, and shifts in buyer sentiment can all impact the market's trajectory.
At Clifton Private Finance, we remain committed to guiding our clients through the intricacies of investing in this exclusive market.
Our expertise, combined with our bespoke financing solutions and extensive network of prestigious lenders, aims to position our clients to navigate the opportunities and challenges of the Prime Central London property market responsibly and sustainably.
Global Economic Recovery
As the global economy continues to recover from the impacts of the pandemic and economic uncertainties, the PCL property market is poised to benefit from increased international investment and demand.
London's status as a global financial hub and its diverse cultural offerings continue to attract wealthy individuals from around the world, further fuelling the demand for prime central properties.
The recovery is expected to have a positive impact on the PCL market in several ways:
Increased International Investment
As economic conditions improve globally, affluent investors from various parts of the world are likely to increase their investments in the PCL market, seeking to capitalise on its stability, prestige, and potential for long-term capital appreciation.
Resurgence of International Travel
The easing of travel restrictions and the revival of international tourism are expected to contribute to the demand for PCL properties, both for investment and rental purposes. As global mobility increases, the allure of owning or renting a property in the heart of London will likely attract more international buyers and tenants.
Strengthening Global Wealth
The recovery of global financial markets and the growth of wealth in various regions are anticipated to fuel demand for luxury property investments, with the PCL market being a prime destination for affluent individuals seeking to diversify their portfolios.
While the broader UK housing market may face affordability challenges until interest rates decline, the PCL sector's unique combination of robust rental demand, global appeal, and the potential for increased international investment positions it for sustained outperformance in the years ahead.
Home of the Cash Buyer
A distinguishing characteristic of the Prime Central London property market is the prevalence of cash buyers and investors with substantial existing capital.
Unlike traditional residential buyers who rely heavily on mortgages, PCL investors frequently leverage their existing wealth to acquire properties outright. This dynamic provides the PCL market with a significant degree of insulation from the impact of interest rate volatility.
As interest rates rise, traditional homebuyers face increased borrowing costs and reduced affordability, potentially dampening demand. However, in the PCL sector, cash-rich investors are less affected by these fluctuations, as their purchasing power remains largely undiminished.
The dominance of cash buyers was particularly evident in 2023, as we’ve mentioned. This substantial presence of cash buyers effectively shielded the market from the effects of higher mortgage rates, contributing to its stability during a period of economic uncertainty. Looking ahead, the PCL market's relative independence from mortgage financing is expected to continue providing a buffer against potential interest rate hikes.
It's important to note that the presence of cash buyers and the insulation from interest rate volatility do not entirely insulate the PCL market from broader economic factors and global trends. While this characteristic may provide a degree of resilience, it does not guarantee sustained outperformance or immunity from market fluctuations.
It's essential to acknowledge that the reliance on cash buyers can potentially create an imbalance in the market, with a concentration of ownership among a relatively small group of affluent individuals or entities. This dynamic may raise concerns about housing affordability and accessibility for a broader segment of the population.
Considering Buying in London?
At Clifton Private Finance, we understand that navigating the complexities of the PCL market demands expertise, foresight, and a profound understanding of the sector.
Our suite of services is tailored to the unique requirements of high-net-worth individuals and investors seeking to unlock the full potential of the Prime Central London property market:
- Tailored Investment Strategy: Our initial consultation delves deep into your financial objectives, investment goals, and risk tolerance. This in-depth assessment allows us to craft a bespoke investment strategy that aligns seamlessly with your unique requirements, ensuring a personalised approach to your PCL investment.
- Exclusive Lender Partnerships - Leveraging our long-standing relationships with prestigious lenders and financial institutions, we can help with the intricate lending landscape to secure favourable terms and competitive interest rates. Our extensive network provides you with access to tailored financing options that cater to the specific demands of investing in Prime Central London properties.
- Bespoke Mortgage Structuring- With an intimate understanding of your financial profile, we structure your mortgage to align with your investment objectives. From interest-only repayment options and flexible repayment schedules to customised loan-to-value ratios and bespoke interest rate arrangements, our tailored solutions are engineered to maximise the potential of your PCL investment.
- Ongoing Guidance and Support - Our commitment extends far beyond the initial financing process. We provide ongoing support and guidance, ensuring that your investment remains aligned with your evolving needs and the dynamic market conditions. Our dedicated team is always available to address your queries, provide expert insights, and help you navigate the ever-changing Prime Central London property landscape.
Seize the potential to capitalise on the promising Prime Central London property market by partnering with us.
Take the first step towards a personalised investment experience by calling us at 0203 900 4322 or booking a consultation today.
