Could now be the time to grab your slice of prime London property? Prices in the capital’s most desirable neighbourhoods have plummeted by a fifth since their peak in 2014.
Despite lower mortgage rates offering potential savings, Savills’ latest report reveals that the priciest London properties are now 20% cheaper than a decade ago. So, what’s behind this drop?
Tax Fears Spooking Wealthy Buyers
Savills suggests that rather than mortgage rates, wealthy buyers are holding back due to uncertainty surrounding potential tax changes in the upcoming budget.
Looming changes, including the controversial scrapping of the “non-dom” tax status (a historical tax break for the wealthy), are causing a stir among potential buyers in prime central London locations. Lucian Cook, head of residential research at Savills, explains, “concerns over what the budget may hold have made buyers more cautious, especially in the most discretionary prime markets.”
Price Drops: How Far Have They Fallen?
This cautious approach has impacted prices, resulting in:
- A 0.7% decrease in prime central London property prices during the third quarter of this year.
- A more significant 1.1% drop compared to the same period last year.
Hope Outside the Centre
While central London feels the pinch, the outer suburbs tell a different story. Buyers in these areas, often driven by the need for more space rather than pure investment, are being tempted back into the market by better mortgage deals. This has led to:
- The first annual price rise in outer prime London since December 2022.
- A 0.9% increase in property values in these sought-after suburbs.
What Does the Future Hold?
Despite the current uncertainty, Savills remains optimistic. Cook reassures potential buyers: “The downside risks in these markets are mitigated by the fact that values remain low in a historic context, and by the enduring appeal of the capital, which will ensure that even those affected are likely to keep a base in prime London neighbourhoods.”
Could this be the perfect opportunity for buyers to snap up a bargain in one of the world’s most desirable cities?