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London prime property hot spots shift as lifestyles are a changing


Rise in prices for London prime property in the last three months of 2020 – this brings prices back to just below where they were a year ago


Average discount from asking price to final sale for prime property in the last three months of 2020 – compares to -9.5% last year, showing buyers are willing to pay more for the right property


Increase in the number of prime property transactions compared with the previous quarter, as pent-up demand from buyers worked its way through the system


Rise in prices for London prime property in the last three months of 2020 – this brings prices back to just below where they were a year ago



Average discount from asking price to final sale for prime property in the last three months of 2020 – compares to -9.5% last year, showing buyers are willing to pay more for the right property


Increase in the number of prime property transactions compared with the previous quarter, as pent-up demand from buyers worked its way through the system  

  • Overview

    chapter 01



    In the final quarter of 2020, prices grew 3.6%, correcting the damage done at the start of the pandemic. This left prime London property prices more or less flat over 2020, down just -0.6% compared to a year ago, but still -12.5% off the peak of the market in 2014.


    Prime property prices are back to where they began in 2020

    “2014 represents a high that markets have yet to recapture. But London remains a desirable destination, and the gradual abatement of Brexit uncertainty and coronavirus restrictions in 2021 could see the London prime property market gather momentum once more.”


    Mohammad Kamal Syed, Coutts Head of Asset Management



    Transactions soar as buying frenzy puts the squeeze on discounts and sales times

    The frenzy in activity after the first lockdown continued in the last three months of the year, with transaction volumes 24.5% higher than the previous quarter.

    Competition among buyers remains high, as can be seen from data on prices as well as average discounts and listing times. Average discounts, for example, fell to -7.9% , the lowest figure we’ve seen since our index began, and down from -9.5% a year ago.

    It now takes 129 days on average to sell a property across prime London, down from 150 days a year ago. This too is the lowest figure we’ve seen since our index began. Competition appears strongest in outer prime locations, where property is selling fastest.

    In the last quarter of the year, new listings – that is, new properties being put on the open market for sale – fell -27.7% compared to the previous quarter. Despite this, there still seems to be a glut of property available for sale on the open market – 14% more than the quarterly average over the last three years – thanks to the wave of new listings that hit the market after the first lockdown.

    Commenting on the feverish property market that bubbled up after the initial lockdown, Coutts Chief Executive, Peter Flavel, said, “Far from putting their property plans on hold, we’ve seen our clients re-assessing how and where they live in response to the pandemic and lockdowns. I’m proud that we’ve been able to help them make their plans a reality during the unique circumstances of the last six months.”

    Looking forward, we expect the volume of new listings to fall in Q1 in light of the latest lockdown. Many vendors will be nervous about having agents and prospective buyers traipsing through their homes.


    Buyer demand remains strong

    There’s still a lot of pent-up demand from buyers, as prices are cheap relative to historic prices. This is particularly true of overseas buyers who haven’t been able to participate in the market in 2020. Sterling has strengthened off the back of the government’s trade deal with Europe, particularly against the dollar.

    Ray Monaghan, Director in the Coutts Treasury Team, says, “Many dollar investors will be feeling the frustration if they’ve been unable to transact in 2020 due to travel restrictions. The pound remains cheap relative to its history and is forecast to trade in a relatively stable range of $1.33 to $1.40. While the weak dollar trend of 2020 looks set to continue, demand from foreign buyers is likely to remain robust.”

    And the government also plans to introduce a 2% Stamp Duty surcharge for foreign buyers of UK residential property from 1 April. All this will provide added impetus for overseas investors to transact in Q1.

    The Stamp Duty holiday on the first £500,000 of all property sales is also due to end on 31 March 2021 and, as such, we expect strong demand in Q1 as investors rush to beat the deadline. Across prime London there are 16.2% more properties under offer now compared to a year ago, and we suspect a lot of this demand is driven by buyers looking to transact before the Stamp Duty holiday ends.

    Investors may be concerned about the latest lockdown and how that impacts their plans, but unlike the first lockdown in March, the property market remains open. Estate agents, letting agents and removal firms are all open for business, and the government has given very clear guidance to buyers, stating, “If you are looking to move, you can go to property viewings.


  • Local insights

    chapter 02

    local insights



    Super prime flexes its muscle

    In the last quarter of the year we saw strong activity in the super prime sales market, with quarterly sales figures higher than any quarter since Q4 2017. Kensington, Notting Hill & Holland Park saw the most activity.

    As in the prime market, data suggests the super prime market also saw strong competition between buyers. The average discounts, for example, are also being squeezed and now stand at -10.9% compared to -19.6% a year ago.

    But we should be cautious about the conclusions we draw when we compare super prime data against Q4 2019. Casting our minds back to the start of December 2019, a General Election saw political uncertainty preying on the minds of super prime buyers, which probably explains why the numbers look strong now compared to 12 months ago.


    Parts of prime central London look cheap relative to historic price levels

    While prices are -12.5% cheaper than the height of the market back in 2014 on average, certain parts of prime central London look even cheaper. For example, prices in Knightsbridge & Belgravia are still -16.6% below the height of the market, and in Pimlico, Westminster & Victoria prices are -16.4% below the peak.

    Buyers in central London markets are able to negotiate heftier discounts, too, with buyers in Mayfair & St James’s, St John’s Wood, Regent’s Park & Primrose Hill and South Kensington on average negotiating double-digit discounts compared to the London-wide average of -7.9%.


    Sales activity in central London postcodes was much slower to take off after the first lockdown, but this seemed to have changed by the end of the year. The highest quarterly sales volume growth was in more central London locations such as Mayfair & St James’s; Pimlico, Westminster & Victoria and Knightsbridge & Belgravia.


    Competition in outer-prime markets remains strong

    Increased competition in the outer-prime postcodes led to discounts being squeezed hardest of all in the areas we cover. In Hammersmith & Chiswick, average discounts are now at -4.5% and in King’s Cross & Islington the average discount is -4.7%, significantly lower than the prime London market overall.

    Prices in some outer prime markets are not too far away from peak levels. For example, in Hampstead & Highgate prices are now just -1.5% below the 2014 highs, while in Battersea, Clapham & Wandsworth prices are -5.9% lower.


  • What does 2020 tell us about the property market in 2021?

    chapter 03

    prime property market trends for 2021





    Despite lockdowns and limits on viewings caused by social distancing, Coutts clients continued to buy property throughout 2020. In fact, we saw a rise in buying activity in main homes, second homes and investment properties over the years before.

    Peter Flavel, Coutts Chief Executive, highlighted how lifestyle changes drove many clients to re-consider their living arrangements. “I know from my conversations with our clients over the last six to eight months that many are reassessing how they live and work. A lot of them are looking at their homes thinking about whether they match up to their lives today. Whether this means finding more space, moving away from congested cities or securing a bolthole out of town, our clients are clearly on the move.”

    At the start of 2021, the real estate market remains hampered by the latest round of lockdown. While the current rules don’t put restrictions on estate agents, it’s having an impact on sentiment and demand from overseas buyers who can’t be certain when London will fully re-open for visitors.


    Houses beat flats as buyers search for space

    In 2020, lending on houses was almost three times that of flats. We also saw a lot more activity in estate and manor house purchases in 2020 compared to 2019.

    “Our clients have found that their homes have increasingly had to become school rooms, workplaces and social spaces. It’s not surprising that they’ve been looking for more space,” said Peter. “Schools will go back, and restaurant and pubs will re-open. 

    But working from home could be here to stay, and the home cinema could be about to take the place of the multi-plex in many people’s lives. This could make smaller properties less attractive.”

    Outside of London, the South East was the most popular area for new mortgages for main homes, particularly Kingston upon Thames, Guildford and Oxford (KT, GU and OX postcodes).


    Big boom in holiday homes

    Lockdown has – understandably – seen a revival in interest in ‘staycations’ and more people looking to secure a home away from home to provide a change of scenery during lockdown. The biggest increase in purchases during 2020 was in holiday homes, which increased by 43% in 2020 compared with the year before.

    “This shouldn’t be entirely surprising given international travel restrictions, and many buyers were spurred into action by the Stamp Duty holiday,” said Peter. “This probably encouraged a lot of people who had been thinking about buying a getaway to move now and take advantage of the discount.”

    The most popular areas outside of London were the South East and South West of England, with Guildford and Tunbridge Wells proving popular in the former and West Cornwall and Gloucester in the latter.


    Buyers not yet tired of London

    Samuel Johnson famously said, “When a man is tired of London, he is tired of life, for there is in London all that life can afford.”

    And despite media reporting on a mass exodus from the capital to the suburbs, Coutts data suggests that our clients still seem to agree with Dr Johnson.

    • The majority of new deals in 2020 were against property in Greater London, albeit slightly down on the year before
    • All lending deals on super prime properties (worth over £10m) in 2020 were in central London. All were houses, rather than flats or penthouses, and were primarily for main dwellings rather than second homes.  Most buyers were British, followed by South African, American and European (Germany and Netherlands in particular)
    • The most popular areas for super prime deals are centred around Kensington & Notting Hill

    “This bodes well for the future of the London property market,” says Peter. “The many attractions of the capital – including theatre and the arts, fine dining, job opportunities and excellent schools – remain a priority for our clients. As long as London can maintain its international reputation it will maintain its appeal.”




    Prevailing conditions positive for property

    As well as social changes, a favourable macroeconomic environment could see 2020’s momentum continue in 2021. Alan Higgins, Coutts Chief Investment Officer, points to three factors.

    “Firstly, the uncertainty with respect to Brexit is largely in the past,” he says. “Secondly, we expect a V-shaped economic recovery as the vaccine distribution progresses. And thirdly, we should see the release of pent-up demand from buyers and sellers who put plans aside during lockdown.”

    He adds, “In the meantime, low interest rates make financing cheap, and returns attractive compared to other assets for investors. We expect close to zero rates in the UK for the next few years at least. The Bank of England’s Monetary Policy Committee is likely to ignore any rise in inflation and focus on reflation, and this is the main positive factor for residential property.”


    Tax changes to take their toll

    However, the taxation regime will limit overall gains, especially for overseas buyers as they will have to pay an additional 2% in Stamp Duty from 1 April 2021.

    Alan says, “Essentially, London and the UK has moved from a relatively low property taxation regime to one comparable with New York and Paris when you consider both the transaction tax and the annual ownership taxation levels.

    “It’s also worth noting that the Stamp Duty holiday introduced by the Chancellor in 2020 will come to an end on 30 June. This will mainly affect the mainstream property market, but there is spill-over into the lower-priced end of prime property.

    “The market will need time to adjust to these changes and we could see a softening in demand in the second quarter.”



    OVER-18S ONLY. TERMS AND CONDITIONS APPLY. You may not be eligible for all Coutts mortgage solutions. Security may be required. Product fees may apply.

    Source of data in the report: LonRes Q4 2020.


  • interactive Map

    chapter 04

    interactive map & postcode selector


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

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