By Barclays.
For several years, the narrative surrounding London’s prime property market has been dominated by uncertainty.
Higher borrowing costs, changes to the tax landscape, geopolitical tensions and increased competition from global wealth hubs such as Dubai have all prompted questions about whether the capital’s appeal is fading.
Yet speak to those operating at the top end of the market and a different picture emerges.
While buyers remain cautious, London continues to attract international wealth thanks to its unique combination of culture, education, connectivity and lifestyle. At the same time, pricing remains below previous highs in many areas, creating opportunities that many buyers believe are increasingly difficult to find in other global wealth centres.
Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, believes London’s long-term appeal remains intact despite recent uncertainty.
“The market has become increasingly selective, but demand for exceptional properties and the best locations remains remarkably resilient,” he says. “For many buyers, today’s market presents a rare combination of opportunity, value and long-term appeal in one of the world’s most established global cities.”
The result is a market defined by contrasts. Buyers can still negotiate meaningful price reductions in some circumstances, yet the best properties continue to attract strong demand. Meanwhile, a growing proportion of transactions are happening away from public view, creating what some describe as a hidden market that has never been more important to understand.
A market still searching for certainty
Prime central London has spent much of the past decade navigating a series of challenges, from higher transaction taxes and political uncertainty to changing interest rate expectations and global events.
According to Tom Bill, Head of UK Residential Research at Knight Frank, the market’s resilience lies partly in its ability to absorb a succession of setbacks.
“The problem for prime and super-prime markets is that there has been a succession of obstacles put in the way,” he says. “There hasn’t just been one.”
Last summer, uncertainty surrounding the UK Budget and changes to the ‘non-dom’ tax regime weighed heavy on sentiment. Earlier this year, signs of renewed momentum began to emerge before geopolitical tensions in the Middle East and higher mortgage costs once again tempered activity.
Attention is now increasingly turning towards the UK’s political outlook and what a change in leadership could mean for future tax and property policy.
The impact can be seen in transaction volumes as much as pricing. Bill estimates activity remains around 10% to 15% below where it might ordinarily be expected.
Yet despite these challenges, there is little sense that demand for London has disappeared.
Bill believes the market could recover once uncertainty begins to fade. “It’s almost the case that you need an absence of bad news for six months and things do start to come back,” he says.
That resilience is reflected in Savills’ outlook for the market. Lucian Cook, Head of Residential Research at Savills UK, says demand has increasingly been driven by buyers willing to look beyond short-term uncertainty.
“There has been a core of demand among those who are prepared to look through the recent uncertainty and focus on the cultural, educational and lifestyle offering of London,” he says.
While Savills expects prime central London prices to remain under pressure in the near term, forecasting a 3% fall this year before stabilisation and recovery later in the decade, Cook believes that extends the opportunity currently available to buyers.
Opportunity remains, but not every property is equal
One of the defining characteristics of today’s market is the growing divergence between different types of property.
While pricing remains under pressure in some locations and sectors, buyers are continuing to compete for exceptional homes.
The distinction is particularly apparent between houses and apartments. Demand for family houses has generally proved more resilient, while increased supply has created opportunities across parts of the flats market. In both cases, however, buyers are becoming increasingly selective, placing a premium on quality, location and condition.
“Whenever there is a buyer’s market, demand for best-in-class homes remains the most resilient,” says Cook.
Richard Gutteridge, Head of Prime Central London Residential at Savills, points to continued demand for larger turnkey apartments and family houses, particularly where quality and location combine with a shortage of supply.
Buying agent Jo Eccles, Founder and Managing Director of Eccord, says media headlines can sometimes create unrealistic expectations among buyers.
“There’s a lot of messaging saying it’s a buyers’ market and buyers hold all the cards,” she says. “But where a property is well priced and is actually a good property, there is still competition.”
Eccles points to one recent client who, before working with her, lost out on three separate properties despite offering the asking price on each of them.
At the same time, significant pricing opportunities remain available elsewhere.
“We are paying anything from full asking price to 26% under asking,” she says. “That gives you the spread of how all over the place pricing is.”
Camilla Dell, Founder and Managing Partner of buying agency Black Brick, sees a similar pattern.
“Whilst it’s certainly true that we are in a buyers’ market, it’s not the case that every property will sell at a huge discount,” she says.
The challenge for buyers is distinguishing between genuine opportunities and properties where sellers remain unwilling to compromise.
The rise of London’s hidden property market
Perhaps the most striking trend in today’s market is the increasing importance of off-market transactions.
According to Eccles, buyers searching publicly may only be seeing a fraction of the available opportunities.
“For every one property a buyer sees on the market, there are five others in the off-market category,” she says.
Those properties can include discreetly marketed homes, withdrawn listings, landlords who may prefer to sell rather than re-let, and owners who are willing to consider offers without formally launching a sales process.
“In my 20-year career, we’ve never had a market where it has been harder to find a property as a buyer,” Eccles adds.
The shift has been accelerated by changes within the industry itself. Smaller specialist estate agents and brokers have become increasingly influential, making the market more fragmented than in previous years.
“In the last three years, two-thirds of properties we have bought for our clients have been through selling agents they had never heard of,” says Eccles.
She describes a growing “underworld” of property opportunities that many buyers simply do not know exists.
Dell is seeing similar trends.
“Last year, 73% of properties we sourced for our clients above £3 million were not being advertised,” she says. “Even below £3 million, 36% of properties we sourced were off market.”
The reasons vary. Some sellers value privacy. Others wish to avoid lengthy public marketing campaigns. In many cases, the most desirable properties are sold before they ever reach a property portal.
For buyers, access to these networks has become increasingly important.
Why global buyers still choose London
Despite ongoing discussion around wealth migration and international competition, London’s appeal continues to resonate with overseas buyers.
American demand has been particularly notable.
According to Dell, fewer than 5% of Black Brick’s clients were American at the peak of the market in 2014. Last year, that figure had risen to 22%.
Many see London as offering compelling value.
“When you compare buying a London property today to the peak, US buyers are getting a 40% discount when considering the fall in the market and the currency depreciation,” she says.
The appeal extends beyond pricing.
Education, culture, lifestyle and connectivity continue to attract internationally mobile families seeking either a permanent relocation or a European base.
Eccles points to London’s unique ability to combine family living with proximity to business districts.
“One client moved from Manhattan and said London is unique because you can have a large family home with a garden and still be 15 minutes from your Bond Street office,” she says.
The city’s position as a gateway to Europe remains another important consideration, particularly for international buyers seeking flexibility across multiple locations.
There is also a less tangible quality that continues to draw global buyers to the capital. London in the summer remains one of the world’s great cities, with its parks, cultural institutions, restaurants and neighbourhoods coming alive during the warmer months.
From Wimbledon and the packed terraces of outdoor cafés to the crowds gathering in pubs and public spaces to follow major sporting events such as the FIFA World Cup, the city’s diversity and international character are on full display. For many internationally mobile families, that vibrancy remains difficult to replicate elsewhere.
Moroukian believes this enduring lifestyle appeal should not be underestimated.
“London offers something very few cities can match,” he says. “Whether it’s spending time in the Royal Parks, enjoying world-class cultural events or simply experiencing the energy and diversity of the city, London continues to offer an exceptional quality of life. That emotional connection to London remains incredibly powerful for many buyers.”
As Gutteridge notes, recent global events have served as a reminder of London’s enduring strengths.
“Recent events have definitely provided a reminder of London’s unique appeal,” he says.
Future-proofing and the flight to turnkey homes
While environmental considerations are becoming more prominent, sustainability is rarely the sole driver of purchasing decisions in the prime market.
Instead, buyers are increasingly focused on future-proofing.
“Buyers and their advisers have become increasingly concerned about future proofing what they buy, so it holds value over the longer term,” says Gutteridge.
At the same time, lengthy planning processes, rising construction costs and greater uncertainty around refurbishment projects are encouraging many buyers to favour turnkey homes – properties that are ready to move into with little or no renovation required.
Eccles says projects that might once have appeared straightforward now involve higher costs and longer timelines, making completed homes increasingly attractive.
That preference for turnkey properties also intersects with energy efficiency, modern building standards and evolving buyer expectations around sustainability. Investors are also paying closer attention to potential future regulatory requirements around energy performance, particularly in the rental market, making due diligence increasingly important when assessing long-term value.
London’s appeal endures
There is little doubt that London’s prime property market continues to face challenges.
Political uncertainty, high transaction costs and a cautious economic backdrop all remain part of the picture. Yet for many buyers, those challenges are being balanced against an opportunity to acquire property in one of the world’s most sought-after cities at prices that remain below previous peaks.
Bill believes much of the underlying demand remains intact.
“Under the surface, there is still demand and there is still resilience,” he says. “As soon as that conveyor belt of bad news stops, then things spring back.”
Moroukian agrees that London’s long-term attractions continue to underpin the market.
“London has repeatedly demonstrated its ability to adapt and evolve,” he says. “Its combination of culture, education, connectivity and global influence continues to attract buyers from around the world. While market conditions may fluctuate, the city’s enduring appeal remains one of its greatest strengths.”
For buyers able to navigate an increasingly complex market, that combination of enduring appeal, selective pricing opportunities and access to best-in-class properties may prove difficult to ignore.