Coutts London prime property index – q1 2025 update

• In Q1 2025, average quarterly prime London property prices have experienced a decline of 2.6%. This drop positions prices 1.6% below the equivalent period last year and 10.8% beneath the market peak of 2014.
• Some markets, such as Knightsbridge & Belgravia, showcase far more pronounced discrepancies, with pricing still over 20% below the height of the market in nominal terms. That translates as a discount of over 40% in inflation adjusted terms from the peak of 2014.  Dollar buyers are getting a ~40% discount in nominal terms given GBP/USD is also down ~20% compared to the peak of 2014.
• In contrast, King’s Cross & Islington reached peak pricing this quarter, with the average price per square foot reaching £1,683 on Q1 2025 sales.

• Although sales volumes are up 4.4% annually, this figure remains 12.9% below the 10-year average, indicating a market lacking urgency.  
• Much of the current activity is being driven by needs-based buyers, those looking in traditional family homes markets, in outer-prime markets such as Battersea, Clapham & Wandsworth and Wimbledon, Richmond, Putney & Barnes.
• Moving forward, affordability and mortgage rates will be pivotal in shaping market performance, particularly in more domestic, outer-prime London markets. Recent economic uncertainty as a result of recent US tariff adjustments is likely to negatively impact buyer sentiment, but it may also positively impact interest rates. This could lead to more competitive mortgage rates, which should in turn bring more buyers back to the market.

• Buyers are increasingly leveraging their position to negotiate substantial discounts, with the average discount now sitting at 9.3% – the highest level in the past five years. Notably, 82% of transactions occurred at discounted prices. In a falling market, such discounts are anticipated where the disparity between buyer and seller price expectations broadens.
• The biggest average discounts are in central London postcodes, such a Mayfair & St James’s (15%) and Knightsbridge & Belgravia (12.5%).
• In contrast, strong competition in outer prime markets is dampening discounts. For example, average discounts in Battersea, Clapham & Wandsworth are 5.6%, and 6.9% in Hampstead & Highgate.

• Following a bumper quarter for super prime sales in Q4, the start of the year resumed with more normal levels of super prime sales activity. Sales were 4.2% up on last year and 12.8% above the 10-year average.
• Knightsbridge & Belgravia had the highest number of super prime transactions in the first quarter of the year.
• Super prime prices have held up, with prices up 5.1% compared to a year ago.

• There has been an increase in supply of properties for sale on the market since the start of the year with new instructions up 25% year on year and up 33% compared to the 10-year average.
• The total number of properties for sale on the open market is also up 8.7% annually. This influx prompts questions regarding the market’s capability to absorb this additional supply and its subsequent effects on pricing in the short term.
• However, the prospect of improving mortgage rates, alongside London's sustained reputation as a safe haven amid global political uncertainties, may help stabilise the market.

All data source: Coutts/LonRes as at 1 April 2025.

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