Coutts London Prime Property Index Q2 2024 | Insights

Key stats

3.4%

The rise in prime London prices last quarter.

12%

The increase in deals under offer compared to last quarter.

7.7%

The average discount buyers are achieving in prime London.

Property prices rise

Katherine O’Shea, Director of the Coutts Real Estate Investment Team, says, “Though the market has struggled to recapture its peak reached in 2014, there has been some price growth since the pandemic, and across prime London prices are now just 6.2% below the height of the market.

“In the last quarter prime London prices increased 3.4%, bringing them back to where they were a year ago – prices are now just 0.6% down on Q2 2023.”

Discounts still counting

“Buyers are still negotiating big discounts but that is starting to come down, suggesting there is more competition coming into the market,” says Katherine.

“The average discount buyers are negotiating across prime London is now 7.7%, down from 9.2% at the end of last year. In the latest quarter, 40.4% of sales had seen their published asking price reduced and 75% of sales were sold at a discount.”

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Stock is rising

Katherine says stock levels are improving, although that’s not the case across all postcodes. “On average across prime London markets, new listings are up 21% and properties available on the open market are up 7% annually,” she says.

Super prime performance

The super prime market has continued to perform well. Katherine comments, “Transaction volumes across London for properties worth £10m and above are up 30% compared to last year, with Kensington, Notting Hill and Holland Park dominating in super prime activity – 47% of all super prime sales were in this area.”

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Sales volumne increases

“Q2 sales volumes have improved too,” Katherine explains. “We’ve seen sales jump up 27.2% on last quarter. That’s still pretty flat compared to a year ago – up just 0.7%. However, we believe factors such as the drop in inflation and the expectation of interest rate cuts in the second half of the year could lead to more sales activity.”

Deals being done

“Across prime London markets there are currently 896 deals under offer. That’s 12% up on the previous quarter,” says Katherine. “It’s a significant rise, suggesting there’s likely to be stronger transactional activity in Q3.”

A better economic outlook

“Now that macro-economic conditions have stabilised, inflation is under control and now we are expecting the first rate cut in four years, investor sentiment is expected to be a lot stronger than in 2023,” explains Katherine.

“We’ve already seen increased demand from those who wanted to move in 2023 but held back due to rising inflation and rising interest rates – now they’ve seen through that, they are coming back to the market.”

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London still globally attractive

Though there might have been uncertainty around a change in government in the UK and what it could mean for the property market, the reality is a Labour landslide was expected and priced-in by markets.

Globally though, there are still variables of political uncertainty elsewhere and we expect the focus will now shift almost entirely to the US presidential election later this year. Indeed, the uncertainty in the US could even bolster London’s appeal and ‘safe-haven’ status.

Potential tax changes and how they could affect the property market

Changes to non-dom status and stamp duty

For buyers, sellers and owners of prime London property, the most relevant points in the government’s manifesto are proposals for the abolition of the non-UK domicile (‘non-dom’) scheme and for an increase in stamp duty land tax (SDLT) for non-residents buying UK property.

“The abolition of the non-dom regime would result in wholesale changes to income tax, capital gains tax and inheritance tax for those previously holding non-dom status,” says Irene Wolstenholme, Director, Wealth Structuring, Coutts.

“The government have said they would close further non-dom tax loopholes and end the use of offshore trusts, so that everyone who makes their home here in the UK pays their taxes here. Inheritance tax is still set to apply to UK property. Those currently holding resident non-dom status may also be impacted by the potential application of inheritance tax on their non-UK assets.”

Irene adds, “In their manifesto, the government also proposed a 1% increase in the current non-resident SDLT surcharge, taking it to 3%, and the top rate of SDLT to 18% for non-residents.”

If clients think they may be affected by the potential changes to non-dom taxation, they should speak to their tax advisor.

Prime reasons for international buyers to stay

The top end of the market continues to be driven by international buyers and we are monitoring how any changes to the UK non-dom status could affect the prime property sector.

London property continues to be regarded highly by international buyers, and many non-doms with families in the UK will continue to view London as their home. There are potential good deals to be had too. For example, the weakness in sterling, in conjunction with the fall in values since the market peaked in 2014, means dollar buyers in certain parts of the capital are managing to secure a 44% discount on 2014 prices.

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Local insights

Certain markets are extremely competitive, and this is reflected in price growth and time on the market. For example:

Prices in Bayswater & Maida Vale have reached new peak levels with average price per square foot in the area now at £1,523.
Property is selling faster in St John’s Wood, Regent’s Park & Primrose Hill compared to any other area covered in our index (132 days on average vs 166 days across prime London). Prices here are now just 0.1% below peak levels.

Although stock levels are improving across London, there appears to be a distinct lack of stock for buyers in certain areas. For example:

In Battersea, Clapham & Wandsworth new listings are down 13%, and properties available for sale on the open market are down 22% annually.
In King’s Cross & Islington new listings are down 18%, and properties available for sale on the open market are down 31% annually.

King’s Cross & Islington saw prices hit a new peak in the first quarter of the year, on average, reaching £1,278 per square foot. However, in the latest quarter, prices have corrected significantly and are now on average below £1,000 per square foot (£966). Prices are now down -8.2% on last year and 100% of properties in this area sold this quarter were sold at a discount to the asking price, suggesting pricing has started to normalise again.

Average Discount

4.7%

Average gross rental yield

OUR PROPERTY INSIGHTS CAN HELP GUIDE YOU FURTHER

Considering your next move? let Coutts help

Our real estate team could help you find the perfect property. And our bespoke mortgage service means we could provide a mortgage that’s as unique as you are.

As lending costs reduce, our range of borrowing solutions could help you and your family make your move in 2024. We also provide expert support to our international clients who might be looking to benefit from unique opportunities in prime central London.

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Or contact your private banker to find out how we could help you.

Coutts London prime property index q2 2024 – prices rebound as demand strengthens

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Key stats

3.4%

12%

7.7%

Property prices rise

Discounts still counting

Stock is rising

Super prime performance

Sales volumne increases

Deals being done

A better economic outlook

London still globally attractive

Potential tax changes and how they could affect the property market

Changes to non-dom status and stamp duty

Prime reasons for international buyers to stay

Local insights

SW11, SW4, SW18

Battersea, Clapham & Wandsworth

17.8%

-3.3%

5.5%

W2, W9

Bayswater & Maida vale

-23.3%

-8.6%

4.2%

SW3, SW10

Chelsea

-19.0%

-7.4%

3.9%

SW6, SW5

Fulham & Earl's court

26.5%

-7.2%

4.9%

W4, W6

Hammersmith & Chiswick

3.3%

-4.9%

5.0%

NW3, N2, N6

Hampstead & HIGHGATE

39.0%

-6.3%

3.7%

W8, W11, W14

Kensington, Notting Hill & Holland Park

5.6%

-7.7%

3.8%

N1, N5, N7

King’s Cross & Islington

-61.1%

-7.4%

5.3%

SW1W, SW1X

Knightsbridge & Belgravia

28.1%

-10.1%

3.6%

WC1, WC2, W1C, W1H, W1U, W1G, W1D, W1B, W1F, W1T, W1W

Marylebone, Fitzrovia & Soho

-19.0%

-11.4%

4.2%

SW1A, SW1Y, W1J, W1K, W1S

Mayfair & St James’s

-10.7%

-11.4%

3.6%

SW1P, SW1V, SW1H, SW1E

Pimlico, Westminster & Victoria

-7.1%

-10.2%

4.9%

SW7

South Kensington