Property prices in upmarket parts of London have bounced back to levels not seen in a year, with the average asking price now £1.5 million.

That’s a jump of 3.4% in just three months, according to the latest Coutts London Prime Property Index. The number of deals being struck has also shot up, with a 12% increase in properties going ‘under offer’ compared to the previous three months.

Experts reckon this mini-boom is being fuelled by bargain hunters swooping in as discounts on asking prices start to shrink. The average discount secured by buyers in prime London now sits at 7.7%, down from 9.2% at the tail end of last year.

Is this the end of discounts?

Katherine O’Shea, a top dog at Coutts Real Estate Investment Team, thinks the days of mega-discounts might be numbered. “Buyers are still negotiating big discounts, but that’s starting to come down, suggesting there is more competition coming into the market,” she says.

But don’t think you’ve missed the boat just yet! 75% of sales in the last quarter went for less than the asking price, with 40.4% of sellers having to slash their initial asking price.

Super Prime Surges Ahead

It’s not just ordinary posh pads that are flying off the shelves. Sales of homes worth over £10 million have skyrocketed by 30% compared to last year. Kensington, Notting Hill, and Holland Park are the hottest spots for these mega-mansions, accounting for almost half (47%) of all super-prime sales.

What’s behind this London property bounce?

1. Inflation Eases, Interest Rates Set to Fall: With the cost-of-living crisis hopefully past its peak, and whispers of interest rate cuts on the horizon, buyers are feeling more confident about splashing out on a new home.

2. London’s Safe Haven Status: While political turmoil brews across the globe, particularly with the upcoming US election, London is seen as a safe bet for investors, further boosting demand for property.

3. Non-Dom Tax Changes: The newly elected Labour government has pledged to shake up the ‘non-dom’ tax rules, which could see wealthy foreign homeowners paying more tax. This has sparked a flurry of activity, with some non-doms selling up while others are looking to bag a bargain before any changes come into effect.

Where are the hotspots?

Prices are soaring in these areas:

• Bayswater & Maida Vale: Prices here have reached record highs, with the average price per square foot now a jaw-dropping £1,523.
• St John’s Wood, Regent’s Park & Primrose Hill: Homes here are being snapped up at lightning speed, with an average selling time of just 132 days.

Bargain hunters should check out:

• Mayfair & St James’s: Average prices have dipped below £2,000 per square foot for the third quarter in a row, offering potential for savvy investors.
• Knightsbridge & Belgravia: Prices here are still a hefty 18.5% below their peak.
• South Kensington: This swanky district has seen a surge in discounts, with buyers bagging an average of 11.3% off the asking price.

A word of warning

Before you get too carried away with your chequebook, remember that the London property market is notoriously unpredictable. While things are looking rosy right now, there’s no guarantee that these price rises will continue.

Here’s what to do:

• Do your research: Talk to local estate agents, scour property websites, and compare prices in different areas.
• Get your finances in order: Make sure you have a mortgage in principle before you start making offers.
• Don’t be afraid to negotiate: With discounts still available, there’s always room to haggle on price.

Happy house hunting!