Central London buyers benefit from discounts last seen in 2009
Prime buyers have the opportunity to purchase property in prime central London at historic discounts equivalent to those seen in the early 1990s and in the immediate aftermath of the GFC, according to the latest research by property firm Savills.
Headline Price Movements in the Prime Housing Markets
| Q4 2024 vs Q1 2025 | Q1 2024 vs Q1 2025 | |
| Prime Central London | -0.7% | -2.6% |
| Outer Prime London | +0.1% | +0.7% |
| Prime Regional | 0.0% | -1.1% |
Savills: Prime Sales Index, Q1 2025
Across Prime Central London, values fell by -2.6% in the year to the end of March, primarily in response to changes introduced in the Autumn budget.
This means that the average property in prime central London is -21.2% lower than its peak in June 2014 – a saving of £1.2 million on the average prime central London property, which is currently worth £4.6m.
“The abolition of the non-doms tax regime and imposition of an increased stamp duty surcharge on additional homes sits firmly behind a further easing in prices in central London,” says Lucian Cook, head of residential research at Savills.
“However, the scale of those price falls has been limited by several factors, including the value already on offer since before the Budget. Compared to the pre-downturn peak of the market, prices are in a similar position to those last seen in 2009 and 1992, when values had fallen by 25% and 22%, respectively.
“But despite some owners becoming non-resident for tax purposes, we haven’t seen a lot of stock hit the market. Our clients are broadly keen to keep a base in London, especially given the backdrop of global geopolitical uncertainty. As such, our expectation that prices in Prime Central London will bottom out this year remains, with prices expected to readjust by -4.0% by the end of 2025, with the majority of falls expected to take place in the first half of the year.”
Domestic demand underpins growth in hotspots
In Prime Central London, Notting Hill (0.0%) was the only market to not experience any falls on the year as it also benefits from a strong hold of domestic demand.
That domestic demand meant prices across the rest of the capital’s prime housing market held firm in the first quarter of the year, though annual price growth remained muted at 0.7. Over the past year, the strongest parts of the London market have been in Hackney (+4.9%), Putney, Wimbledon and Islington (all at +3.0%).
“Domestic buyer demand has been supported by the interest rate cuts that have already occurred, but the prospect of lower debt costs later in the year hasn’t provided a great deal of urgency among prospective buyers,” continues Cook.
Price falls steady across prime regional markets, but still lag the mainstream
Similarly, outside of London prime property prices showed no discernible upward or downward movement in the first quarter of the year.
According to Savills, prices remain down -1.1% on an annual basis, as the prime market recovery lags the mainstream, given the underlying tax environment.
The Midlands and North were the strongest regional performers, albeit at a modest +0.9% annual growth. This contrasts with annual falls of -4.6% across more discretionary coastal markets, as these second home hotspots absorb an additional 2% stamp duty surcharge.
At a local level, three of the top five performing locations are home to grammar schools (Tunbridge Wells, Sevenoaks and Lincoln).
“VAT on school fees has generally tempered demand, with some buyers sitting on their hands as they work out the impact on their household finances.
“But on a local basis, hotspots are continuing to outperform, especially places that provide strong state schooling or access to less expensive private education.”