Known for its high-end residential properties, the London prime market is a separate entity from the wider real estate market in England and Wales, driven by limited stock availability and differentiated by the unique characteristics of buyers and sellers. 

In this article, our experienced Residential Property team give an update on the London prime market. 

What is prime London?

There is no set definitive definition of the locations and types of properties that qualify as prime London. The category refers to the most desirable addresses in England’s capital city, determined by location, value, and the type and quality of homes, which can change and evolve according to shifting demand. 

The boundaries of prime have extended over the years to stretch beyond the city centre, now encompassing, for example, some housing stock in Battersea, Clapham, Fulham and Victoria Park. 

However, surveyors and estate agents agree that prime central London property has Knightsbridge and Belgravia at its core. It is accepted that the prime central London market generally relates to the high-value real estate market in the City of Westminster, the Royal Borough of Kensington and Chelsea, and parts of the boroughs of Hammersmith and Fulham, and Camden. 

According to private banking and wealth management services Coutts, the average price across prime central London in 2023 was £1,428 per square foot. 

How is the current prime London property market?

Latest figures suggest a sluggish start to the year in the London prime market, which translated into a 3.9% drop in prices, says Coutts.  

In its London Prime Property Index Q1 2024 report published at the end of April, Coutts revealed several key findings about the capital’s prime market. 

These included: 

• Lower prices. According to Coutts, prime London prices fell 3.9% in the first quarter of 2024, and are now 1.6% lower than the same period last year.  

• Cooler market. Across prime London, prices are 9.3% below the height of the market in 2014. 

• Slow-moving sales. Coutts reports that Q1 sales volumes have been “sluggish”, down 7% on last year, which it attributes to uncertainty in the mortgage market about the timing of a cut in the base rate.  

• More listings. New listings are up 3.7% on 2023, and up 31.5% compared to Q4 2023. 

• Quicker sales. Property is selling faster, the report finds, with a transaction taking an average of 161 days to complete. This is the lowest figure Coutts has seen in the last 12 quarters, suggesting there are willing buyers. 

• Buyers’ market. The average discount buyers are negotiating currently stands at 8.9%. This is down slightly on the previous quarter’s figure (9.2%), but the move towards double-digit discounts suggests buyers have the upper hand.  

• Many properties going under asking price. In the first quarter of 2024, 44.9% of sales had seen their published asking price reduced and 80% of sales were sold at a discount (either because the published asking price was reduced and/or buyers negotiated a discount). 

• Central prime discounts available. Buyers looking for properties in traditional prime central areas are negotiating the biggest discounts. According to the report, 94% of property in South Kensington is sold at a discount on the original asking price with buyers on average getting 12.4% off the asking price. In Chelsea, 90% of property is sold at a discount with buyers negotiating an average of 10.5% off the asking price.  

• Peripheral prime areas holding firm. Discounts are not as readily available in more peripheral prime markets, with the report citing only 33% of property in Kings Cross and Islington is sold for less than the asking price, and just over half of prime real estate in Hammersmith and Chiswick sold at a discount with buyers on average negotiating 4.5% off the asking price. 

• Super prime market is up. Transaction volumes across London for properties worth £10m and over are up 9.1% compared to last year.   

Despite the initial minor drop in prime London property prices at the start of this year, confidence in the market remains, and Coutts believes indications suggest the market will fare better in 2024 than last year. 

“We’ve seen increased demand from those that wanted to move in 2023 but held back due to rising inflation and rising interest rates and prime central London, in particular, is long overdue a rebound,” said Katherine O’Shea, director of Coutts Real Estate Investment team. 

“The general consensus is that price growth will be pretty flat this year but over the next five years, prime central London should outperform the rest of the market,” she said.  

Any changes the new Labour government introduces in relation to the treatment of non-doms is also likely to have an impact on the prime central London market, where demand from international, high and ultra-high net worth individuals is concentrated.  

While question marks remain, it is advisable that anyone considering investing in the London prime market seeks specialist advice to review what any changed tax position means for their longer-term plans. 

Prime Residential Property Lawyers London

Our experienced Residential Property team can help with all aspects of buying, selling, developing, and financing residential property for individuals and families, developers, and private banks. 

Based in London’s West End, Muscatt Black Graf has particular expertise in dealing with prime London property. We advise high-net-worth individuals, corporate entities and domestic and overseas investors, with their residential property needs in London and beyond. 

Our Residential Property team is headed up by Alex Finney. Alex acts for high-net-worth individuals and families in respect of their UK property interests. She advises on matters involving properties in prime London and high value transactions elsewhere in England and Wales.  

Alex specialises in enfranchisement, lease extensions and development agreements and works closely with a network of esteemed professionals to assist clients in respect of all their private client needs, as well as providing advice as to the tax considerations and structuring relating to their property transactions.  

Alex is contactable via af@muscattblackgraf.com. 

This blog was prepared on 10 July 2024. It is not intended to be advice and should not be relied upon as such.