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Coutts London Prime Property Index | Q2 2019

Prices are edging up, but don’t get excited – fewer properties on offer means the law of supply and demand is setting a floor

5 min read


Our latest survey of prime property prices in London finds prices supported by low levels of properties for sale as buyers make a tentative return to the market.


Overall increase in London prime property prices since the end of 2018


Average rental yield for London prime property


Average discount to asking price in Q2, compared to -12.7% in Q1

  • Overview

    Chapter 01


    Prime property prices in London edged up again in the second quarter of the year, leaving them more or less back where they were 12 months ago, and 3.1% higher than they were at the end of last year.

    Strengthening price signs might be drawing buyers back to the market, with sales activity up 21.4% compared to the previous quarter. Prices are still 14.5% cheaper than at the peak of 2014, and even with the upward movement seen in the previous two quarters, prime properties remain good value relative to recent history. But the low prices are also discouraging sellers, leaving buyers chasing a smaller pool of properties on offer.

    For rental property, gross rental yield remains unchanged at 3.9% on average across prime London markets. Despite the various tax changes affecting landlords in recent years, demand for rental property remains strong with some prospective buyers turning to renting while Brexit uncertainty remains.

    Buyers fight for the best on offer

    The biggest challenge for buyers now is lack of stock. The number of prime properties on sale on the open market is down by -12.5% on last year, leaving buyers with far fewer properties to choose from. New instructions are also down, -20.5% lower than the same period last year and -35.2% lower than the last peak in 2014.

    Katherine O’Shea, Coutts Real Estate Investment Service, says: “Fewer properties on offer means that competition can be intense among buyers for desirable properties when they come up, and it’s not surprising to see gazumping on the rise. Prime property transactions across London take 169 days on average to conclude – from listing to exchange – leaving plenty of time for gazumping tactics.

    Alex Midha, senior private banker in the Coutts European team, says, “Managing the transactions is very important to ensure all parties are speaking to each other regularly and that the vendor and vendor’s agent are confident that the buyer is credible and proceedable.” 

    Midha adds, “We can introduce clients to the Coutts panel of screened and vetted buying agents, to help them with buy-side advice, and many clients take advantage of this service.”

    “Fewer properties on offer means that competition can be intense among buyers for desirable properties when they come up, and it’s not surprising to see gazumping on the rise.”
    Katherine O’Shea, Coutts Real Estate Investment Service

    Discounts falling, but still high

    The more competitive environment for buyers is also driving discount rates down. The average discount in Q2 has fallen to 11.1%, compared to 12.7% in Q1 and the lowest figure we’ve seen for the last three quarters.

    However, listing prices tend to lag the market, and this can make discount data hard to read. Some sales represent properties that may have been on the market for quite some time, with an initial asking price reflecting pricing trends in late 2017 or early 2018. Prices have fallen substantially over the last 18 months, and so discounts are possibly less representative of hard bargaining on the part of buyers, and more an acknowledgement by sellers of the current market reality.

    The risk of down-valuations remains a challenge for buyers, too, and in a market where house prices have been falling, property valuations coming in lower-than-expected are not uncommon.

  • Local Highlights

    Chapter 02

    Local Highlights

    Demand for family homes sustains outer-prime areas

    Regardless of whatever else happens in the property market, family homes are always in demand. Accordingly, prices in outer-prime areas that are dominated by domestic buyers – such as Wimbledon and Hampstead – have continued to stand up. Less than a third of homes in these areas are selling at a discount to asking price, compared to 47% on average across prime London, and the average discount is two or three percent lower than across prime London.

    Elsewhere, prices remain a long way off the height of the market. For example, Knightsbridge & Belgravia, South Kensington, and Hammersmith & Chiswick are all over 20% cheaper than at the peak of 2014.

    Despite low prices, lack of stock continues to be a challenge for buyers. New instructions are down significantly across all areas covered by our index compared to a year ago, with falls ranging from -23% to -70%.

    In all but one of the areas covered by the index, the number of prime properties available for sale on the open market has come down compared to a year ago. The number of properties for sale in Fulham & Earl's Court is -20% lower than a year ago and – even starker still – the number of properties for sale in Kensington, Notting Hill & Holland Park is -25% lower than a year ago.

    However, the supply and demand effect is proving beneficial for sellers in some areas. Prices in King's Cross & Islington are close to record levels, just 2.7% below the peak, with lack of new stock in this popular area supporting prices.

    At the heights of the super-prime market, sales were concentrated in Mayfair and St James’s, which also saw the biggest price rise of 4.1%. This reflects the traditional appeal of this central location and the lack of stock to meet demand.

    Helping you buy your home

    Coutts can help you find your dream home anywhere in the UK.

    We can introduce you to professionals experienced in finding property to ensure you are aware of a host of suitable opportunities – both on and off the market.

    Our agents are skilled negotiators who aim to secure property on the best available terms and place you, whenever possible, in a ‘preferred purchaser’ position.

    Coutts also offers a range of flexible lending options tailored to your situation.

    To find out more, speak to your private banker or wealth manager, or call Coutts 24 on 020 7957 2424.

    Your home or property may be repossessed if you do not keep up repayments on your mortgage. 

    Over-18s only. Terms and conditions apply. You may not be eligible for all Coutts mortgage solutions. Security may be required.

  • Interactive Map & Postcode Selector Tool

    Chapter 04

    Interactive Map & Postcode Selector Tool

    Use the map and postcode selector below to see how your area performed last quarter.


Key Takeaways

Prime property prices in London have continued the gradual rises seen in the last two quarters, perhaps an indication that the bottom of the market has been reached. Sales activity has also increased and discounts to purchase price are narrowing, which show an increase in buyer enthusiasm.

However, low stock levels remain a challenge, and lack of supply in the face of a gradual uptick in demand is surely a significant supporter of prices. 

About Coutts Real Estate

With significant experience in the real estate market, Coutts real estate experts draw on a clear understanding of our clients' property investment objectives, extensive connections and expertise to provide a consolidated service that meets their needs.

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