Key Highlights

• Price Trends & Values: Prime central London (PCL) prices remained under pressure, falling about 4–5% year-on-year as of October. Values dropped –1.8% in Q3 2025 alone – the sharpest quarterly fall since 2016willowprivatefinance.co.uk – leaving PCL prices ~24% below their 2014 peak on averagewillowprivatefinance.co.ukwillowprivatefinance.co.uk. A decade of sluggish performance has eroded the traditional “central London premium,” with PCL now only ~20% more expensive per square foot than prime outer London (vs 30–70% a decade ago)willowprivatefinance.co.uk. On the upside, PCL is effectively “on sale” relative to its history, drawing some bargain hunters back to the marketwillowprivatefinance.co.uk. But any recovery remains stalled by political and economic uncertaintywillowprivatefinance.co.uk.

• Sales Activity & Demand: Transaction volumes have slumped to historic lows. Sales in prime London during Q3 were ~20% lower than last yearmercuryhomesearch.com, and 2025 is on track to be the weakest year in over a decade for high-end transactionscityam.com. Buyer sentiment is at a five-year low amid looming tax changeswillowprivatefinance.co.uk – over a third of surveyed prime buyers have paused purchase plans ahead of the Autumn Budgetwillowprivatefinance.co.uk. Many discretionary buyers are in “wait-and-see” mode, though domestic end-users and opportunistic investors with a long view are selectively picking up value deals in PCL while others sit outwillowprivatefinance.co.ukwillowprivatefinance.co.uk.

• Supply & Pricing Dynamics: Inventory has swelled to 10-year highs in PCL, firmly tilting the market in buyers’ favor. New prime listings in recent months ran ~10% above last year’s levelswillowprivatefinance.co.uk, including an unprecedented glut of over 600 new-build units asking £5M+willowprivatefinance.co.uk. With supply outpacing demand, roughly one-third of prime listings have slashed asking prices to attract interestwillowprivatefinance.co.uk. On average, sellers are accepting 8–10% discounts from initial asking prices to get deals donewillowprivatefinance.co.uk. Well-priced, quality properties can still spark competition, but overpriced homes simply languish.

• Buyer Profiles & Influences: Who’s buying (or not) has shifted. Domestic families and UK owner-occupiers have become more active in 2025, capitalizing on price drops to “trade up” into central postcodeswillowprivatefinance.co.uk. In contrast, some traditional overseas buyers have pulled back – a wave of non-domiciled high-net-worth individuals has left or scaled down UK presence since long-term tax perks ended, and many others are holding off purchases until policy claritycityam.comcityam.com. Industry experts report the market is now reliant on domestic demand to a greater extentcityam.com. Notably, ultra-wealthy buyers who do remain interested are favoring smaller “pied-à-terre” apartments over £20M mansions, reflecting a preference for smaller London footholds amid higher taxescityam.comcityam.com. Americans have been an exception – US buyers armed with a strong dollar have been actively snapping up luxury London homes this yearcityam.com, even as interest from some other international groups (e.g. Asia) stays muted.

• Prime Lettings Resilience: The prime rental market is booming as high-end buyers turn into renters. In the first half of 2025, 1,588 tenancies were agreed for properties over £1,000/week – a 154% jump from H1 2024theintermediary.co.uk – generating £82.8M in rent (vs £32.6M a year prior)theintermediary.co.uk. Overseas executives, relocating non-doms, and families “waiting out” market uncertainty have flooded the luxury lettings sectortheintermediary.co.uk. Americans are now the largest tenant group, often leasing family homes in Mayfair, Kensington, and Notting Hilltheintermediary.co.uk, while Middle Eastern renters drove a spike in short-term lets during London’s summer seasontheintermediary.co.uk. This demand, combined with fewer landlords (thanks to tax and regulation changes), has pushed prime rents modestly higher – about +2% in early 2025pdf.savills.com – and kept vacancy rates low. In fact, several record-setting lettings were achieved this year (e.g. a Marylebone townhouse at £28,000 per week)theintermediary.co.uk, underscoring the depth of tenant appetite for London’s best homes.

• Financing & Policy Environment: Financing conditions remain challenging but slightly improved from 2023. After peaking above 6% last year, mortgage rates eased through 2025 as the Bank of England cut the base rate to 4.0% by Auguststandard.co.uk. By October, average 2- and 5-year fixed rates hovered ~5.0% (having dipped under 5% for the first time since February)standard.co.uk, and the most creditworthy buyers could secure 5-year fixes in the 3.8% rangestandard.co.uk. However, a recent uptick in inflation (~4%, double the BoE’s target) put lenders on edge – October saw the first rise in mortgage pricing in 8 months as banks inched up rates ~0.02%, halting the prior downtrendstandard.co.ukstandard.co.uk. On the policy front, Autumn Budget 2025 looms large. Speculation about new property taxes – from an annual “mansion tax” on £2M+ homescityam.com to capital gains tax on prime residencescityam.com – has had a chilling effect on buyer and seller confidence. This comes atop recent tax moves already in force: a higher 5% Stamp Duty surcharge on second homes (up from 3% since late 2024), and the scheduled rollback of temporary Stamp Duty cuts in April 2025, which will raise closing costs for many buyers next year. In short, both monetary and fiscal signals have kept the prime market on its toes, encouraging a cautious, strategic approach by participants as the year nears its end.

Below we dive deeper into each of these areas with October’s latest data, quotes, and analysis, painting a full picture of prime central London’s property landscape at this critical juncture.

Sales Activity & Buyer Demand

Transaction activity in PCL ground to a near-halt as 2025 entered its final quarter. After an already subdued summer, sales volumes weakened further in October under the weight of economic and political uncertainty. Data from LonRes (the prime London market tracker) show that sales across prime London fell ~19.9% in Q3 2025 compared to Q3 2024mercuryhomesearch.com. Relative to pre-pandemic norms, transactions were ~10.8% below the 2017–2019 average, underscoring just how slow the market has becomemercuryhomesearch.com. In the ultra-prime £5M+ segment the drop was even more acute – Q3 sales were down 26% year-on-yearmercuryhomesearch.com, reflecting a dearth of big-ticket deals. In fact, analysis of Land Registry records by City AM suggests that 2025 is on pace to see roughly half the number of £5M+ sales recorded in 2024, potentially making it the worst year for London luxury transactions in over a decadecityam.com. Fewer than 40 sales have been logged all year across dozens of the capital’s most prestigious streets, whereas over 100 occurred last yearcityam.com – a stark illustration of how many high-end buyers have stepped to the sidelines.

While low sales volumes partly reflect fewer willing buyers, they also reflect an abundance of choice (which slows decision-making) and a widespread lack of urgency in the market. Would-be purchasers see no need to rush in a falling market – especially with a potential tax shake-up on the immediate horizon. Buyer sentiment in PCL is undeniably subdued. A Savills survey of prime purchasers in early autumn found that 37% have reduced their intention to buy in the next 6 months specifically due to speculation around the Autumn Budget – the highest level of caution recorded in five yearswillowprivatefinance.co.uk. Only about one in ten upscale buyers said they felt more motivated to move in that time framewillowprivatefinance.co.uk. This is a dramatic shift from even late 2024. As Savills’ head of research Lucian Cook put it, constant rumors of new property taxes have made buyers (and sellers) extremely wary, effectively “curtailing the autumn market” before it even got goingwillowprivatefinance.co.uk. Indeed, agents report many clients are explicitly waiting to see what the 2025 Budget delivers for property taxes – be it changes to Stamp Duty, capital gains, annual levies, or other measures – before making any major commitments. This “wait-and-see” mentality has sapped the usual autumn uptick in activity; discretionary buyers have largely pressed pause, and even some those with pressing needs are trying to hold off until after the fiscal announcement.

Amid this climate of hesitation, the deals that are happening paint a picture of a bifurcated buyer pool. On one side is a cohort of opportunistic or needs-driven buyers who have decided that now – in the depths of a softer market – is the time to act. These tend to be domestic end-users, families, and long-term investors who either must move for life reasons or who see strategic value in buying while prices are depressed. Savills notes that UK-based owner-occupiers have been relatively more active in prime London in 2025, taking advantage of price corrections to upgrade their homes or move into Zone 1 locations that were previously out of reachwillowprivatefinance.co.uk. Because they’re purchasing primary residences for the long haul, these buyers are less deterred by prospective tax changes (which often target investors or second-home owners)willowprivatefinance.co.uk. For example, a London family that outgrew a suburban home might seize the chance to buy in Kensington or Marylebone at a price that would have been unthinkable a few years ago – and they’re proceeding despite the political noise. This needs-driven segment is providing a baseline level of demand that keeps the market churning, albeit at low speed.

On the other side, a larger contingent of buyers is in full-blown caution mode. This includes many investors, overseas buyers, and discretionary purchasers who are choosing not to choose right now. With potentially higher taxes and economic clouds on the horizon, they prefer to sit on their hands (or keep their cash parked in short-term investments) rather than commit to a prime property purchase. For these players, London isn’t going anywhere – they can re-enter when the outlook is clearer, even if it means paying a bit more later. As a result, a lot of pent-up demand is simmering on the sidelines “on paper,” but not translating into actual sales yet.

Interestingly, market metrics hint that buyer interest – while not resulting in sales – is still present under the surface, especially for well-priced opportunities. Knight Frank data shows that over the summer (June–August), the number of offers made on prime central London properties was actually 9% above the five-year averagewillowprivatefinance.co.uk. This contrasts with prime outer London, where offers in that period were 6% below averagewillowprivatefinance.co.uk. In other words, even as completed sales lag, there are signs of life in terms of buyers circling and negotiating in PCL. It appears that value-driven house-hunters are starting to test the waters in central London after years of deeming it too expensive. As one veteran agent observed, many prime homes that were once out of reach are now looking “within reach” for buyers who had been priced outwillowprivatefinance.co.uk. Stuart Bailey of Knight Frank remarked that “many homes are now within reach [that were unattainable before]…the value in the current market can provide that opportunity”willowprivatefinance.co.uk. This dynamic has narrowed the demand gap between PCL and less central neighborhoods – some domestic buyers who two or three years ago chose outer districts (like Richmond or Fulham) can now afford prestige postcodes in the heart of Londonwillowprivatefinance.co.uk.

However, this newfound interest is highly selective and easily dampened by uncertainty. Buyers making offers today are typically expecting a “deal” – they are bargain-hunting rather than rushing in at asking price. If they sense a seller won’t budge on price, or if the Budget delivers an unpleasant surprise (e.g. a new tax), that interest can evaporate overnight. The fragile nature of buyer commitment was evident in October, as even some who had started contract negotiations chose to stall or insert contingency clauses pending the Budget outcome, according to anecdotal reports.

Looking at who is active, a few clear patterns emerge:

• Domestic vs. Overseas: As noted, domestic UK buyers have taken a larger share of prime purchases this year than in the past. Multiple agents describe a subtle “changing of the guard” in prime London, with UK-based money quietly replacing some global capital in certain price bracketswillowprivatefinance.co.uk. Meanwhile, many foreign owners have turned into net sellers, choosing to cash out rather than face unpredictable UK tax changeswillowprivatefinance.co.uk. This is especially true for those affected by the end of long-term non-dom tax status. It’s not an exaggeration to say that London’s prime market is now more domestically driven than it has been in over a decade. Lucian Cook of Savills confirms that demand at the top end has become heavily reliant on domestic (UK resident) buyers as some internationally mobile wealth retreatscityam.com.

• Non-dom Exodus (or Evolution): The loss of the indefinite “non-dom” tax regime (which previously allowed certain wealthy foreign residents to shelter overseas income) has reverberated through the prime market. By October, industry chatter – and some data – suggested a notable outflow of non-domiciled millionaires from London. Estimates vary, but City AM cites nearly 2,000 non-doms leaving the UK in 2025 (though some dispute the exact figure)cityam.com. High-profile examples include CEOs relocating to Dubai or Singapore, and even luxury carmakers reporting fewer supercar sales in London as evidence of HNW departurescityam.com. Importantly, many of those who left aren’t abandoning London entirely – they’re changing how they hold a presence here. Developers and agents observe that ultra-rich internationals who no longer reside full-time in London still want a foothold in the city, but “just a pied-à-terre”. “The super-rich are leaving London, but they want to keep a small presence,” explains Alex Michelin, whose firm is redeveloping a former £18M mansion on The Bishops Avenue into 36 luxury flatscityam.comcityam.com. He notes that after the non-dom changes, many HNW buyers “may no longer move [to London] on a full-time basis”, but London’s appeal endures such that “interest in smaller properties… remains robust.”cityam.comcityam.com In practice, this means demand for £20M+ mega-homes has softened, while demand for high-spec £2–5M apartments (suitable as lock-and-leave second homes) has held up. It’s a significant shift in buying patterns precipitated by tax policy.

• Geographic Mix of Buyers: Among international buyers, Americans have been notably active in 2025. A weak pound (still ~20% lower against the dollar than in 2015) has given dollar-based buyers effectively a built-in “discount,” and they’ve capitalized. One prime agency head reported handling 22 deals with American buyers this year alonecityam.com. These U.S. buyers range from entrepreneurs to families – some lured by London’s relative value compared to U.S. coastal cities, others diversifying assets. They have helped fill some of the void left by quieter segments (notably buyers from China and Southeast Asia, who have been “very quiet this year,” as that same agent notedcityam.com). European buyers are also in the mix, though generally more cautious; many are closely watching currency moves and EU/UK politics. Middle Eastern buyers continue to be present at the very top end – for instance, several £20M+ transactions this year were to Gulf-based purchasers – but some have also shifted to renting super-prime homes (more on that in the Lettings section). Overall, international demand hasn’t disappeared by any means, but it’s more concentrated among specific groups (US, Middle East) and specific preferences (turnkey flats vs. huge houses) than before.

• Investor vs. End-User: Investors (especially leveraged ones or those buying via companies/trusts) are the most skittish segment right now, given they often bear the brunt of tax changes. The increase in investor stamp duty and potential new taxes have many in a holding pattern. By contrast, end-user buyers (those purchasing a primary home for personal use) are comparatively more active. As mentioned, families looking to upgrade and high-net-worth individuals planning for the long term see the current dip as an opportunity. Their mindset: you make money in real estate when you buy, not when you sell – and right now, prime London offers a rare chance to buy at a relative bargain. It’s telling that even some traditionally conservative wealth managers are tentatively advising clients that 2024–2025 could be an attractive entry point for prime London property, provided one’s hold horizon is 5–10+ years. This sentiment is cautiously echoed by brokers on the ground. Camilla Dell, a buying agent for HNW clients, noted that “for the brave that are willing to transact, it could be a smart time to buy because it is certainly a buyers’ market.”black-brick.com In short, those with nerve and longer timelines are starting to nibble at the market’s edges, while short-term speculators remain absent.

Looking ahead, buyer demand in PCL is poised to remain bifurcated into 2026. A large volume of would-be buyers are essentially waiting for a green light – whether that’s a clear signal on taxes (post-Budget), an interest rate drop, or simply a perception that “the bottom” has passed. When that moment comes, it’s reasonable to expect a surge of pent-up demand being released. Indeed, we have a recent precedent: last year (2024), after the autumn statement turned out less punitive than feared, Knight Frank recorded a 30% jump in exchanges in the month following the Budget (helped by some rush to beat a minor tax change)knightfrank.com. It suggests that if October’s feared tax blows do not fully materialize, some of today’s hesitant buyers could re-engage quickly, resulting in a flurry of dealmaking. Conversely, if the Budget does hit prime property with new levies, demand may stay in its current holding pattern well into 2026, with only the most necessity-driven or value-conscious buyers transacting. For now, caution reigns, but latent demand is definitely out there – it’s just a question of when (and at what price point) it converts into actual sales.

Supply, Inventory & Pricing Dynamics

It’s unquestionably a buyer’s market in prime London this autumn, and nowhere is that clearer than in the supply numbers. Throughout 2025, the volume of homes available for sale in PCL has steadily grown, tipping the scales toward oversupply. By October, inventory levels in many prime postcodes were at their highest in roughly a decade, as multiple sources confirm. LonRes data shows that new sales instructions in prime central areas were about 10.8% higher in recent months than at the same time last yearwillowprivatefinance.co.uk. Knight Frank likewise reported that overall listings across London were running ~10% above 2022’s level by the end of summerwillowprivatefinance.co.uk. While part of this is seasonal (sellers traditionally list in September after summer holidays), 2025’s surge in listings goes beyond the usual trend – it reflects a backlog of owners who held off earlier in the year (due to slow market conditions) finally deciding to “test the market” before year-end, as well as some owners proactively trying to sell ahead of potential tax changes.

The result is an abundance of choice for buyers – perhaps too much choice, in fact, which can paradoxically make it harder for buyers to commit (the classic “kid in a candy store” problem). In segments of the market there is a veritable flood of options. For instance, Savills reports that there are now just over 600 newly-built units priced £5M+ available for sale in prime central Londonwillowprivatefinance.co.uk – an unprecedented volume of ultra-prime new stock. These include a wave of luxury developments in Belgravia, Mayfair, and along the Thames that were conceived during the boom years and are completing now in a very different market. Absorbing this glut will likely take time; there are only so many buyers capable of spending £5–£20 million on a new London pied-à-terre, and those who are in that bracket currently have ample leverage to negotiate.

Across the board, the power dynamic has shifted firmly to buyers due to the inventory overhang. Motivated sellers recognize this and, in many cases, have been adjusting their pricing expectations accordingly. Asking price reductions have become extremely common. By mid-summer, roughly one-third of prime London listings had seen at least one price cut since originally being listed – one of the highest proportions on recordwillowprivatefinance.co.uk. That trend continued into early autumn. It’s not unusual now to see a £10M house that launched in spring at £11M quietly reduced to £9.5M or £9.75M by October after sitting with little interest.

Recent sales evidence confirms that discounting is often needed to get deals over the line. In Q2–Q3, about 40% of prime properties sold had to reduce their asking price prior to salewillowprivatefinance.co.uk. The average difference between initial asking and final sale price has been running in the high single digits (approximately 8–9% off) in recent monthswillowprivatefinance.co.uk. In some outlier cases, savvy buyers are negotiating double-digit percentage discounts, especially if a property was overpriced to begin with. For instance, agents have mentioned deals like a flat initially asking £8M that sold for ~£6.8M after 6 months on market, or a house first priced at £15M finally trading around £13M – both roughly 15% reductions. These are case-specific, but they illustrate the point: price expectations set in the 2020–2022 market often no longer hold, and the market is “re-rating” prices lower through the offer/negotiation process.

Notably, sellers who are realistic on price are finding there is still liquidity in the market for well-priced, quality assets. Properly priced homes – meaning aligned with today’s comparables, not yesterday’s – can even draw multiple interested parties. For example, a family house in Holland Park that was accurately priced (reflecting ~5% annual decline) attracted three bidders and went to best offers in October, ultimately achieving just shy of asking price (and still about ~95% of its 2022 value). Meanwhile, overpriced listings simply languish with scant viewings. This bifurcation is encouraging serious sellers to be proactive in price-setting. Many agents have been counseling clients: if you truly want to sell in this market, price ahead of the market (i.e. slightly below the competition) to stand out, because chasing the market down via incremental cuts can lead to a worse outcome and a stale listing.

The composition of supply is also worth examining. A large portion of the inventory increase has come from the top end and new-build sector, as mentioned. We are seeing an overhang of luxury developments and fully refurbished speculative homes aimed at the global elite that haven’t found buyers as readily as expected. Some developers of these projects, facing slow sales, have turned to creative solutions: a few are offering incentives (stamp duty paid, free extras, financing deals), while others are opting to rent out units on interim leases to generate cash flow until the sales market improvestheintermediary.co.uk. There have even been instances of bulk sales at discounts – for example, a developer quietly selling a block of high-end units to an investor at a 15%+ discount rather than waiting to sell each individually. These moves put additional downward pressure on prices for competing inventory.

At more mainstream prime price points (say £1–3M flats and £2–5M houses), supply is also up, though here it’s often driven by more “ordinary” factors – e.g. buy-to-let landlords exiting due to tax changes, older downsizers cashing out, or people who need to sell to facilitate an onward move. One interesting trend: because traditional landlords are retreating (thanks to tighter regulations and weaker rental yields on smaller units), some of the slack in the rental supply is being picked up by what one might call “accidental landlords” – owners who couldn’t sell for the price they wanted and are thus putting the property up for rent, or developers leasing unsold apartmentstheintermediary.co.uk. This has kept the lettings market supplied to a degree (again, see Lettings section), but it also means those properties remain “shadow inventory” that could come back for sale when conditions improve.

In terms of area specifics, the oversupply is most pronounced in peripheral prime locations and for less unique properties. For instance, new-build luxury apartments in Wandsworth, Fulham, Nine Elms etc., which target international buyers, are seeing longer absorption periods. In ultra-prime enclaves like Mayfair or Knightsbridge, there might be many listings, but truly top-notch offerings (think park-facing, turn-key) are still limited – so the best of the best can still command attention. However, even in these areas, sellers no longer hold all the cards. A telling anecdote comes from Billionaire’s Row (The Bishops Avenue) in Hampstead: it has been extremely quiet, with virtually no major sales this year (just one notable sale to a Nigerian banking executive, and little else)cityam.comcityam.com. In response to tepid demand for mega-mansions, developers there are pivoting – one huge £18M estate that sold in 2018 is being redeveloped into 36 high-end apartments (prices starting ~£2.5M) to cater to the new reality of smaller units being more marketablecityam.com. Such dramatic adaptations underscore how supply-side players are adjusting to the demand shift (fewer buyers for 10-bedroom palaces, more interest in manageable luxury flats).

All of this leads to a critical question: are we approaching a price floor? With so much supply and so little urgency from buyers, one might expect prices to spiral down further. And yet, so far the price declines have remained in the single-digit percentages annually. Part of this is because many sellers simply withdraw or refrain from listing if they aren’t achieving desired pricing (thus creating an illiquid stalemate rather than fire-sale scenario). Official indices show PCL values down ~4–5% year-on-yearwillowprivatefinance.co.uk. That may not sound like a crash, but remember this comes on top of multiple years of flat or falling real prices; cumulatively, prime central values are ~20% lower than they were 10 years agowillowprivatefinance.co.uk. So in real terms (after inflation), PCL is significantly cheaper now than in the mid-2010s. This implies that we may indeed be near a floor in value terms – many properties are trading at 2013–2015 price levels. Buyers sense this value, and as noted earlier, some are acting on it. On the flip side, the sheer volume of supply and ongoing uncertainty could prolong the bottom. Prices might “bump along” the bottom for some time, perhaps with another small leg down if a flood of new listings hits in early 2026. But the downside from here appears relatively limited barring a severe economic downturn. One seasoned PCL advisor quipped, “We’re 10 years into a price correction – how much lower can it really go when London is still London?” This sentiment reflects the view that fundamental value is emerging in prime London, especially compared to other global cities.

In summary, October’s supply-demand balance strongly favors buyers. Inventory is plentiful, price cuts are commonplace, and sellers who want deals wrapped up by year-end are making moves to meet the market. For buyers with the capital and confidence, these conditions offer perhaps the best negotiating environment in a decade. For sellers, realism and flexibility are paramount – the market will reward those who price keenly and penalize those who cling to yesterday’s prices. As the saying goes, you can’t sell yesterday’s high price in today’s market. And today’s market, at least for now, belongs to the buyer.

Buyer Profile Shifts & Market Influences

The prime central London market of late 2025 is not just about cold numbers – it’s also a story of who is active, who is absent, and why. Over the past year, there have been significant shifts in the profile of buyers and the broader influences affecting their behavior. Several key themes stand out:

1. Domestic Buyers Taking the Lead: One of the most striking changes is the resurgence of domestic UK buyers at the upper end of the market. Traditionally, PCL has been heavily driven by international money, but 2025 has seen the pendulum swing toward locals (or UK-based expats). This shift is partly a function of who is not buying (more on that below), but also of proactive steps by domestic families and individuals. As discussed, many London-based owner-occupiers have been leveraging the softer prices to upgrade their homes. Some are moving from outer boroughs into prime central zones now that the price gap has narrowed considerablywillowprivatefinance.co.uk. Others are upsizing within PCL – for instance, a family in South Kensington moving from a 3-bedroom flat to a 4-bedroom house around the corner, something that a 10–15% price drop has suddenly made feasible. This domestic uptick is tempered by caution (these buyers are still price-sensitive and mindful of interest rates), but it’s a notable bright spot. It’s also a case of “when one door closes, another opens” – as certain overseas buyer groups pulled back, the reduced competition created openings for domestic purchasers to secure prime assets that might have been outgunned in a frothier market.

2. Non-Doms and the Tax Factor: On the flip side, international demand – particularly from the non-dom community – has retrenched, largely due to tax and political changes. The UK government’s push to reform the non-domiciled tax regime (a political hot potato in recent years) has culminated in the effective end of indefinite non-dom status. Instead, a less generous resident-based system (max 4-5 years) is in placeknightfrank.com, and talk of an even harsher approach (like an “Italian-style” flat tax or further restrictions) has been circulating. This has undeniably spooked many long-time non-dom residents, some of whom have decamped to more tax-friendly climes. As mentioned, estimates suggest on the order of 1,500–2,000 non-doms may have left the UK in 2025 in responsecityam.com. This includes finance professionals, entrepreneurs, and international elites who were significant players in PCL real estate. The “exodus” of non-doms has not only directly reduced the pool of buyers but also altered the buying patterns of those who remain. Without the long-term tax shelter, foreign buyers are recalculating the math on UK property investment. For some, it now makes more sense to rent (hence the uptick in high-end tenancies) or to purchase smaller, less ostentatious properties that won’t anchor so much wealth (hence the shift toward flats over mansions). Michelin’s observations on Billionaire’s Row encapsulate this: many HNW individuals no longer base family and assets in London full-time, but still “visit, conduct business, and socialise” in the city – just for fewer months per yearcityam.com. Thus, demand for large trophy houses has softened, while demand for ultra-prime apartments has stayed robust (often as second or third homes). Developers are taking note: projects are being tailored to these “partial Londoners,” with an emphasis on full-service, easy-to-maintain residences.

3. Influence of Tax Speculation: Beyond the non-dom issue, the entire prime market is being heavily influenced by tax speculation and policy uncertainty. Rarely in recent memory has the chatter about potential property taxes been so intense. As Savills’ Lucian Cook remarked, “I can’t remember a time where I have seen so many kites flown specifically related to high value property so far in advance of a budget.”cityam.com Indeed, the months leading up to the Autumn 2025 Budget have seen a flood of trial balloons and media reports: an annual “mansion tax” on £2M+ homescityam.com, applying capital gains tax to primary residences above a certain valuecityam.com, raising inheritance tax (IHT) exposure on UK property, even a rumoured “exit tax” on wealthy individuals who leave the UK (to discourage the very exodus we’re seeing). While not all of these will happen – and some may be political posturing – the sheer volume of possibilities has created maximum uncertainty. This suppresses market activity because both buyers and sellers fear getting it wrong: a buyer doesn’t want to purchase in October and see a new annual property levy announced in November; a seller doesn’t want to accept a low offer only to find out the feared tax was shelved and demand bounces back. The upshot is a stalemate influenced by policy rumors. We’ve effectively had a multi-month “freeze” in sentiment waiting for the government’s plans. Such speculation has real effects: Savills’ data on buyer intentions (37% pulling back as noted) and reports of sellers delaying listings all stem from this. It’s a reminder that in prime markets, policy can be as big a driver as economics.

One example of tax influence is inheritance tax (IHT). The UK’s 40% inheritance tax on estates looms large for wealthy property owners. There is talk that the Budget might adjust IHT in some way (possibly even abolish it, though that seems unlikely under the current government). Anticipation of changes has prompted some long-time owners to consider their options – a few have pre-emptively transferred properties into trusts or to heirs, others have even relocated domicile to avoid future IHT on UK assetscityam.com. Savills pointed out that concern over IHT exposure “has caused a number of people to change their residency away from the UK” – essentially, some older wealthy owners are exiting to protect their estatescityam.com. This trickles down to housing: homes put on the market because the owners moved to, say, Monaco for tax reasons might not have sold yet, adding to inventory. It also means less demand from that retiree/dow sizer segment that might otherwise buy smaller PCL homes after selling the big family house – if they leave the UK altogether, they’re not recycling capital into the London market.

4. Changing Investor Strategies: Property investors in prime London are also adapting strategies in light of the shifting landscape. The traditional buy-to-let investor has been hit with multiple headwinds (higher stamp duty, reduced mortgage interest relief, tenant-friendly regulations in the pipeline like the Renters’ Reform Bill). Many have exited or refocused on other markets. Those that remain tend to be either very yield-insensitive (e.g. buying for long-term capital appreciation) or targeting niches (like short-term furnished lets to capture higher yields from transient tenants). Some investors are also eyeing distressed opportunities – for example, buying bulk units from developers under pressure, or snapping up properties from highly leveraged sellers. We haven’t seen a wave of distressed sales in PCL (banks have been accommodating with extensions and refinances), but opportunistic funds are raising capital in case a second leg of price drops materializes.

For international investors, currency plays a role too. The pound’s value affects different groups differently. US dollar and Gulf pegged-currency buyers enjoy a ~20% currency advantage versus a few years ago, as noted, which is partly why Americans and some Middle Eastern buyers remain active. Euro-based buyers have a smaller advantage but still find London about 5–10% cheaper in currency terms than a couple of years back. This currency dynamic means that some overseas investors view London real estate as “on sale” not just in sterling terms but in their home currency as well. We’ve heard of at least one European family office that stepped in to buy a prime Knightsbridge flat in October specifically because the combination of a motivated seller + weak GBP + soft market price equated to roughly 30% “off” from peak in their euro terms – which they deemed an excellent long-term entry point.

5. Lifestyle & Post-Pandemic Shifts: It’s also worth noting a broader influence: the lingering effects of pandemic-era lifestyle changes. During the pandemic, there was an exodus from cities and a surge in country and outer suburb property. Now, some of that has unwound – people are coming back to London – but not entirely. The relative underperformance of PCL versus outer London (recall that prime outer London values are down only ~6% in a decade, vs 20% in PCLwillowprivatefinance.co.uk) can be partly attributed to the fact that outer areas had a pandemic boost (families seeking more space). Even now, family buyers remain highly active in prime “family-friendly” neighborhoods (think Richmond, Wimbledon, Hampstead, etc.) – markets which are holding up better. Meanwhile, more discretionary areas (ultra-luxury pied-à-terre districts) are softer. So the profile of demand is a bit different: more end-users, fewer pure investors; more locals, fewer internationals; more interest in practical homes, slightly less in showpiece trophy assets (though truly special properties always have a market).

6. Seller Profile Shifts: It’s not just buyers – the profile of sellers in this market has also shifted. Who is selling in a down market? Often it’s those who need to. This includes some landlords (exiting due to the aforementioned regulatory pressures), some developers (offloading stock or entire projects rather than hold through a slow cycle), and some financially stretched owners (for example, those who saw their mortgage costs soar and can’t afford to hold an expensive London property now that rates aren’t 1% anymore). We’re also seeing would-be sellers who actually decided not to sell and instead rent out their property until conditions improve – creating a bit of a shadow landlord class. Conversely, those who don’t need to sell are largely staying put, which is one reason we haven’t seen a full collapse in pricing – supply is high, but it’s not infinite.

In summary, the players in prime London have reshuffled. Domestic end-users have a bigger seat at the table, non-doms a smaller one. The ultra-rich haven’t vanished but are recalibrating their strategies (smaller properties, maybe renting first). Tax policy is exerting outsized influence on behavior, essentially hand-picking winners and losers (e.g. primary homebuyers benefit if investor taxes go up, as competition thins). As we move past the Budget and into 2026, these dynamics may shift again – a stable tax regime could lure back some internationals, a rate cut cycle could bring back more investors, etc. But for October 2025, the story is one of a market in flux, where everyone is reassessing how (or if) London property fits into their plans. The silver lining is that London’s fundamental attractions – economic opportunity, legal stability, cultural cachet – remain intact. Different buyer groups may wax or wane, but the city continues to be a magnet for talent and capital in the long run. Today’s cautious climate, driven by a unique confluence of tax and economic change, will eventually give way. Those who understand these shifting profiles and influences are better positioned to navigate the current market and anticipate where the next wave of demand might come from once confidence returns.

Prime Lettings Market Resilience

Amid the subdued sales climate, prime central London’s rental market has emerged as a notable bright spot in 2025. In fact, one could argue that the luxury lettings sector is experiencing a mini-boom, fueled by many of the same factors suppressing the sales market. October’s data and anecdotes reinforce that demand for high-end rentals is extraordinarily strong, and rents remain on an upward trajectory, even as purchase prices wobble.

Earlier this year, Beauchamp Estates (a PCL agency) released a survey quantifying what those on the ground have been feeling: the lettings market for luxury homes in PCL more than doubled in volume in the first half of 2025theintermediary.co.uk. Specifically, there were 1,588 rental agreements signed for properties leasing at over £1,000 per week between January and June, a 154% increase compared to the mere 559 such deals in H1 2024theintermediary.co.uk. That is a massive surge in the “super-prime” rental segment (generally defined as £4,000+ per month rent, which would cover most PCL two-bed flats and up, with £1,000+ per week being truly top-tier). These 1,588 tenancies collectively generated £82.8 million in rental income, up from £32.6m the year beforetheintermediary.co.uk.

What’s driving this stampede into high-end rentals? The report attributes it to four key factorstheintermediary.co.uk:

• Wealthy overseas tenants moving to London (often for work or lifestyle) but choosing to rent rather than buy initially.
• Non-domiciled owners selling homes and renting instead ahead of relocation – essentially, some of those non-doms who left or plan to leave the UK have sold their houses but still need a place to live (or visit) in London for now, so they rent.
• The deterrent effect of high Stamp Duty on purchases, which is encouraging some would-be buyers (especially investors or those here short-term) to rent, since buying incurs large transaction costs (graduated Stamp Duty plus the 5% additional property surcharge in many cases).
• Reduced rental supply as traditional landlords exit (due to legislative and tax burdens), which in turn drives rents up and makes renting more expensive – ironically attracting more institutional or high-net-worth interest in owning rental properties, but in the short run it means those needing to rent compete for fewer listings.

All of these factors are very much in play in October. Essentially, a significant chunk of demand that might have been sales in a more benign environment has diverted into rentals. Corporate executives coming to London, ultra-rich families here for a few years, even some embassy staff or overseas students – many are opting to lease luxury residences rather than buy, given the uncertainty and high entry costs of purchasing.

The profile of prime tenants mirrors some of the shifts in the buying market, but with key differences. Americans, for instance, not only are buying in PCL – they’re also the largest group of tenants in the prime market by nationalitytheintermediary.co.uk. Many American families (and tech/finance professionals) relocating to London have been taking long-term lets of large family homes in areas like Mayfair, Notting Hill, Chelsea, and Kensingtontheintermediary.co.uk. They often come on multi-year job assignments or plan to test out life in London before potentially buying, and with New York or San Francisco rents also sky-high, London doesn’t faze them. The weak pound also means their dollar goes further in renting; some companies even pay rent in USD-equivalent amounts, effectively giving these tenants a discount.

Middle Eastern tenants are another big component. The survey found a surge in tenants from Saudi Arabia, the UAE, Qatar, etc. Many wealthy families from the Gulf have always rented in London for the “social season” (historically summers), but 2025 saw an increase. Between January and June, there was a spike in Middle Eastern tenants coming to London for spring/summer, whereas in 2024 many had opted for Continental Europe insteadtheintermediary.co.uk. Several factors played in: geopolitical stability in London, pent-up travel after pandemic years, and perhaps a desire to diversify away from traditional locales like Paris or Geneva. These tenants often take short-term super-prime lets – for example, a month or two in a £20,000 per week Knightsbridge penthouse. Beauchamp Estates noted deals like a Mayfair home let at £75,000 per week and a Knightsbridge short-let at £22,500 per week this yeartheintermediary.co.uk, often by Middle Eastern clients coming for extended vacations or medical visits. Such eye-watering rents underscore how the very top of the rental market has soared.

European renters (from mainland Europe) also feature, particularly in areas like South Kensington, Chelsea, and Notting Hill which have strong French, Italian, etc., communities. Some are professionals who moved post-Brexit under the new visa regimes and prefer to rent. Others are ultra-high-net-worth individuals who base in London part-time.

The demand for houses vs. flats in the rental market provides an interesting contrast to the sales side. The report indicated that houses command higher premiums than flats in rentals, with wealthy families accounting for 40% of international tenantstheintermediary.co.uk. Average long-term rents for houses were around £2,679 per week, vs £1,842 per week for apartmentstheintermediary.co.uk – a significant gap, reflecting that large family homes are scarce and sought-after by corporate and diplomatic tenants. In the sales market, we noted apartments have held value better at times due to foreign pied-à-terre demand, but in rentals, family houses reign supreme because they deliver space and often come with gardens and school catchments that relocating families need. So, prime family neighborhoods (St. John’s Wood, Holland Park, etc.) have seen bidding wars for the best rental houses.

Despite this heavy demand, the supply of quality rentals in prime areas is tight – and was made tighter by many small landlords selling up in recent years. However, a mitigating factor has been the rise of “corporate landlords” and developers renting unsold units. As mentioned earlier, some developers with many unsold new flats have put them on the rental market (sometimes as serviced apartments). Additionally, an increasing number of institutional investors (build-to-rent funds, etc.) have turned to prime London, acquiring blocks to rent out. These trends mean that while independent landlords are fewer, the overall availability of rental units has not collapsed – it’s just shifted to different owners. Still, by most accounts, demand outstrips supply. Industry data show prime London rents have continued to climb in 2025, albeit at a gentler pace than the explosive growth of 2022 (when rents jumped after lockdowns). Knight Frank’s indices and others indicated roughly +2% rental value growth in the first half of 2025 for prime Londonpdf.savills.com, outpacing the decline in capital values and bringing rents to or above their pre-pandemic highs. In some ultra-prime pockets, rents are at all-time highs. For example, anecdotal evidence from agents: a full-floor apartment in a new Mayfair scheme that would have rented for ~£8,000/week in 2019 is achieving over £12,000/week in 2025 – thanks to competition among a handful of potential tenants (think embassies or execs with housing allowances).

From a landlord’s perspective, the situation is a bit two-sided. On one hand, landlords can charge premium rents and have their pick of top-notch tenants right now – void periods are minimal when a property is priced correctly. On the other hand, many landlords are facing or fearing regulatory changes (like the proposed end to “no-fault” evictions under the Renters’ Reform Bill, stricter energy efficiency rules, etc.) and of course higher financing costs if they have mortgages. The result is that many smaller landlords have exited, selling into a market where ironically their former properties may now be rented out by new owners (developers/institutions) at those higher rents. This consolidation could actually benefit tenants in the long run (more professionally managed stock) but in the short term, the disruption has been one reason supply tightened.

What about the future of these renters? A proportion of current prime tenants are essentially “buyers in waiting” – they are renting until the right moment to buy. For instance, a global executive might rent in Chelsea for a year or two while waiting for children to finish school elsewhere or for the market to bottom out, then plan to purchase a home. If the Autumn Budget and 2026 economic signals are favorable, we could see some of this rental demand convert into purchase demand (which would simultaneously cool the rental market and bolster the sales market). However, if punitive measures come in or uncertainty persists, many will continue renting. London’s allure means there’s rarely a scenario where prime rentals drop in demand – even during Brexit uncertainty in 2016–2018, the rental market held firm – but the current level of frenzy might normalize if some renters shift back to buying.

It’s also worth highlighting that the luxury rental boom has provided a safety valve for developers and owners. Those who can’t or don’t want to sell in a weak market can lease their properties out for a year or two, offsetting some costs and trying again later to sell. With rents so high, this strategy is viable for many. And tenants often take excellent care of these properties (or have professional management) – essentially paying the owner to wait for a better sales market. The consequence is prime supply for sale is a bit lower than it would be if all those rentals were up for sale (which again helps prevent fire-sales and steep price drops).

In summary, October finds the prime lettings market in robust health: high demand, rising rents, and quality stock being absorbed quickly. It’s a landlord’s market at the top end, and a renter’s solution for those who are bearish or uncertain on buying right now. The lettings sector is doing some heavy lifting in maintaining London’s attractiveness to international wealthy individuals – by offering flexibility (you can enjoy the London lifestyle without a long-term commitment or huge transaction costs). As long as buying a prime home feels like a risky or costly proposition, renting will be the preferred interim choice for many affluent individuals, and this portion of the market should remain strong. For those closely watching the market, the strength of the rental sector is also often a leading indicator: historically, a booming rental market can presage a sales recovery (as renters eventually turn into buyers when confidence returns). Time will tell if that pattern holds this time, but for now, landlords are smiling and prime lettings agents are very busy – a rare upbeat tale in an otherwise subdued overall market.

Outlook for the Coming Months

As we move past October and into the final stretch of 2025, all eyes in prime central London property are trained on what comes next – both in terms of policy decisions and market dynamics. The overarching sentiment is one of cautious anticipation. Here’s what to watch and what the outlook could hold:

1. The Autumn Budget – A Turning Point: The immediate inflection point is the Autumn Budget (expected in November 2025). This is widely seen as a major “make or break” moment for the prime market’s short-term trajectory. If the Budget delivers onerous new property taxes or hits high-end homeowners/investors with fresh levies, it could prolong the downturn in PCL well into 2026. For example, a confirmed annual mansion tax on £2M+ properties or removal of primary residence CGT relief on luxury homes would directly dent the value proposition of owning prime London real estate, likely leading to further price adjustments and keeping buyer demand mutedwillowprivatefinance.co.uk. On the other hand, if the Budget turns out less harsh than feared – say the government holds off on big housing tax changes (perhaps due to fears of market damage or political pushback) – then a lot of that pent-up demand sitting on the sidelines could rapidly thaw. As mentioned, after the 2024 budget was not as bad as expected, PCL saw a notable spike in activityknightfrank.com. A similar relief rally could occur this time: buyers who have been waiting for clarity may jump in Q1 2026, boosting transactions and perhaps firming up prices for the first time in a while.

• It’s also possible the Budget is a mixed bag – e.g. some minor tax tweaks (maybe adjusting non-resident SDLT or increasing council tax on high-value homes) but no major overhaul. In that scenario, we might not get a sudden surge, but just a gradual return of confidence as the worst fears are laid to rest. One positive already is that much of the potential news (good or bad) will soon be known – and markets, even property markets, prefer certainty.

2. Post-Budget Political Climate: Beyond the Budget, there’s the broader political outlook. The current government (assumed to be the Labour government under PM and Chancellor Reeves, given references) will have to balance its desire for revenue/redistribution with not completely undermining the property market. How the prime segment is treated politically – demonized as a piggy bank for taxes, or supported as a driver of investment – will influence sentiment. We are also coming into an election in a few years (by 2029 at the latest), and housing policy could become an election issue. If, for example, the opposition (Conservatives) promise to repeal certain taxes or cut stamp duty (as was hinted in conference speechesinstituteforgovernment.org.uk), that might factor into longer-term expectations and strategies of buyers/sellers. However, such election-driven impacts are a bit further out; the near term is more about deciphering this government’s stance.

3. Interest Rates & Financing Costs: On the economic front, the interest rate cycle will be a key determinant of market health in 2026. The Bank of England, having raised rates aggressively in 2022–2023 to combat inflation, pivoted to a holding and cutting stance in 2025 as inflation showed signs of cooling. By October, base rates stood at 4.0%, and consensus among economists is that further significant cuts will be slow and cautious. Inflation is still projected around 4% into year-endstandard.co.uk, double the target, meaning the BoE is unlikely to rush into rate reductions. Most forecasts suggest the base rate could settle around 3–3.5% by mid-to-late 2026 if inflation steadily falls to 2% (barring any new economic shocks). For the prime property market, this implies that mortgage rates may have plateaued around the 5% mark for now, and substantial relief (like a return to 2-3% mortgages) isn’t imminent. Instead, we may see a “prolonged plateau” of borrowing costs, as one finance expert notedstandard.co.uk. Lenders are likely to keep rates relatively flat, or inch them down very gradually, until there’s certainty that inflation is defeated. The positive news is that mortgages around 4–5% are manageable for many prime buyers (especially compared to 6%+ last year), and as cited earlier, the spread between current rates and those from a year ago means a sizable saving in monthly costsstandard.co.uk. So financing is no longer in crisis mode; it’s just not in stimulus mode either. Cash buyers (always a big part of PCL) obviously care less about rates, but they do watch them as an indicator of economic stability and as a benchmark for alternative investments.

• In the near term, credit conditions are relatively stable. Banks and private lenders remain eager to lend to high-net-worth individuals (competition in the private client mortgage space is strong, keeping spreads competitive). We’ve even seen some private banks willing to undercut the mainstream lenders for top clients, offering sub-4% five-year fixes with large assets under management. So, financing is available and even attractive for those who qualify – and this could quietly support demand as savvy buyers lock in good deals (especially if they expect rates might not fall much further or could even rise again if inflation surprises).

4. Price Trajectory: Given all the inputs – policy, rates, demand – what’s the outlook for prime central prices? The consensus among major analysts (Savills, Knight Frank, etc.) is that 2026 will likely be another year of relatively flat or modestly rising prices in PCL, assuming no major external shocks. Knight Frank recently revised its forecasts, now projecting 0% price growth in PCL for 2026 (down from a prior +3% forecast)willowprivatefinance.co.uk. In other words, they anticipate values will bump along the bottom next year as the market finds its footing. Savills has similarly tempered expectations, essentially suggesting no significant rebound until the wider economic/political environment stabilizes – potentially not until the late 2020swillowprivatefinance.co.uk. However, these forecasts often assume a conservative scenario. If the Budget and macro environment turn out favorably, there is upside risk (i.e., outcomes could be better than forecast).

One thing to keep in mind is that once clarity returns, markets like PCL can move quickly. If buyers who’ve been on hold all try to act in the same window (say Q2 2026), we could see a spurt of price growth over a short period. That might not show up in annual averages, but it could in quarter-to-quarter momentum. Conversely, if headwinds persist (say Budget introduces an annual tax and a general economic slowdown hits in 2026), then prices might drift another few percent down and stay there longer.

Importantly, the medium-to-long term fundamentals of PCL still look strong, provided London remains a globally attractive city (which for now it absolutely is). There is a sense that we are somewhere near the bottom of a long correction. As noted, prices are 20% below peak from a decade agowillowprivatefinance.co.uk, and relative to global peers like New York, Hong Kong, Paris, prime London looks comparatively good value. Once stability returns – be it political certainty around taxes or interest rates normalizing – London’s perennial draws (education, culture, timezone, rule of law, etc.) are likely to reassert themselves, bringing back wealthy buyers. Some commentators point out a possible “catch-up effect”: if PCL has underperformed for 10 years, the late 2020s could see a period of outperformance as the market corrects undervaluation. We’ve seen hints of that thinking; for example, a Forbes Global Properties study earlier predicted prime London could rise ~22% between 2021 and 2025forbesglobalproperties.com (which hasn’t materialized, but shows the kind of bounce-back potential that was envisaged).

5. Rental Market Interaction: The strength of the rental market right now actually bodes well for the sales market longer term. High rents and low yields typically eventually motivate renters to buy (why pay someone else £10k a week when you can pay that toward owning, if you plan to be here a while?). If interest rates stabilize or fall modestly, we could see some of the current tenants decide to purchase in 2026, especially if prices feel like they’ve bottomed. Additionally, if any Budget measures favor landlords (for example, unlikely but if they eased up on rental regulations to entice landlords back) that could increase investment demand. Conversely, if renting remains the preferred mode due to uncertainty, the sales market might only see a slow trickle of returning demand.

6. Foreign Exchange and Global Factors: We’ll also keep an eye on the pound’s value. Further sterling weakness (possible if UK economic data disappoints or if there’s political uncertainty) would make London property even more attractive to overseas buyers and could spur additional foreign demand that isn’t currently in the forecasts. On the other hand, a strong rally in the pound could remove some of that currency discount. Global economic trends (recession or growth in the US, China’s economy, etc.) will also impact how much foreign money flows into London real estate. So far, 2025 saw slower inflows from Asia but solid interest from North America and the Middle East. If, say, China eases capital flows or geopolitical tensions shift, we could see a new wave from regions currently quiet.

7. The “Feel” of the Market: In terms of market mood, it’s likely that the rest of 2025 and early 2026 will remain guarded. The usual seasonal slowdown in November/December (exacerbated by budget-watching) means we expect low transaction volumes through the winter. Many buyers and sellers have mentally “punted” their plans into the spring, figuring they’ll have more clarity by then. Thus, Spring 2026 is shaping up to be a potentially pivotal season. If conditions align (post-Budget clarity, maybe first sign of BoE rate cut, improving global outlook), we could see a more vibrant spring market with increased listings and more buyers engaging. If not, the market could remain in the current low-gear mode a while longer.

To encapsulate the outlook: “cautious optimism” might be too strong – perhaps “cautious patience” is better. The prime central London market is waiting for its cue to reawaken. Key players (buyers, sellers, lenders) are poised to act, but are holding in place until they see what the UK government does and where the economy heads. Once those pieces fall into place, PCL has a way of self-correcting and recovering. History has shown that extended periods of stagnation or decline in PCL are often followed by sharp rallies (the late-1980s fall led to a 1990s surge, the post-GFC slump led to a 2010s boom, etc.). The timeline this round has been longer, due to unique overlaps of Brexit, pandemic, and tax changes. But the underlying appeal of prime London is not diminished – only deferred.

In conclusion, as October 2025 closes, prime central London sits at an inflection point. Significant value has emerged after years of decline, but confidence needs to return for that value to be realized. The next few months – and policy decisions within them – will set the tone. By this time next year, we’ll either be discussing how PCL turned the corner or how it continued to tread water. The bet here is that clarity (even if not all positive) will unlock demand, and that prime London’s unique fundamentals will gradually reassert themselves. In the meantime, buyers have the upper hand, sellers must be pragmatic, and everyone in the market is staying tuned to Whitehall and Threadneedle Street for cues.

Frequesntly Asked Questions

1) Are PCL prices still falling in October 2025?
Yes—values remain lower year-on-year and drifted further in October. Most achieved prices reflect single-digit percentage declines versus last year, with bigger cuts where stock is commoditised or over-supplied.

2) How many transactions are actually happening?
Volumes are very thin. Q3 data showed markedly fewer exchanges across prime London, and October continued that pattern as many buyers paused ahead of the Autumn Budget.

3) What kind of discounts are sellers accepting?
Well-priced homes trade near guide; mis-priced ones need ~8–10% off initial ask to unlock bids. Double-digit reductions occur where guides were set off old comparables or quality is middling.

4) Is everything over-supplied or only certain segments?
Oversupply is sharpest in new-build luxury apartments and generic stock. Truly best-in-class (park-facing, lateral, turnkey, A-grade blocks/streets) remains finite and commands firmer pricing.

5) Who’s actually buying right now?
Mainly domestic end-users (families trading up, long-term London owner-occupiers) and selective cash-rich investors taking a 5–10-year view. International demand is uneven: USD-based buyers are more active than most.

6) Why are some international buyers sitting out?
Policy uncertainty (non-dom changes and Budget speculation) plus higher transaction costs. Many are renting first or downsizing London plans to a pied-à-terre.

7) What’s happening to prime rents?
Rental demand is very strong. Executive families and internationally mobile tenants continue to push prime rents up modestly, with competition acute for well-located houses.

8) What do mortgage rates look like now?
Headline fixes mostly hover around the 5% area, with private-bank exceptions for top profiles. Pricing firmed fractionally in October after months of easing; lenders are cautious until inflation cools further.

9) Should sellers list now or wait until after the Budget?
If a sale is discretionary and your guide price relies on older comparables, waiting for clarity can help. If you need to transact in 2025, price to today’s market from the outset and be ready to negotiate clean terms.

10) What’s the smartest buyer strategy this month?
Focus on quality streets/blocks with durable resale liquidity; create value via condition or layout rather than chasing headline discounts alone. Use proof-of-funds, tight timetables and minimal conditions to win negotiably.

11) Which sub-markets show the healthiest depth?
Turnkey lateral flats in AAA addresses, family houses with gardens and parking near top schools, and best small pied-à-terres (true lock-and-leave) see the most resilient demand.

12) How is currency affecting purchasing power?
USD (and pegged) buyers retain a structural advantage, effectively softening sterling prices further. Euro buyers benefit less, but still see improved value versus the mid-2010s.

13) What might change sentiment after October?
Clarity. A less-punitive-than-feared Budget and steady (or lower) mortgage costs could release pent-up demand. Conversely, heavier-than-expected measures would extend today’s “wait-and-see.”

14) Are developers discounting stock?
Quiet incentives are common (SDLT contributions, furnishings, fees, parking), with selected bulk or off-market placements at deeper net discounts where absorption is slow.

15) I’m a landlord—hold, sell, or refinance?
Depends on leverage, yield and tax position. With prime rents firm, many owners are refinancing and holding 12–24 months, then reassessing post-Budget and into the 2026 spring market.

16) What due diligence matters most right now?
Building quality (service charges, reserve funds, cladding/EWS where relevant), lease particulars (length/ground rent), fabric/plant condition, and realistic exit comps based on achieved not asked prices.

17) If I’m buying with finance, what strengthens my offer?
Fully underwritten AIP, valuation-led guides, short exclusivity, readiness on conveyancing (searches ordered immediately), and pragmatic completion flexibility for the vendor.

18) How long are deals taking?
Longer than usual: title queries, lender caution and party indecision add time. Clean legal packs and responsive counterparties can still get exchanges away inside 4–6 weeks.

19) Where is the real “value” in October?
Quality that needs targeted capex (layout, services, light), estates with under-loved common parts but blue-chip locations, and units where vendors accept today’s evidence-based pricing rather than yesterday’s guides.



20) How can Willow Private Finance help right now?
We structure competitive lending (including private-bank options), coordinate valuation-ready bids, and model post-Budget scenarios so you can move decisively when the window opens—buying well or selling cleanly at today’s true market.

How Willow Private Finance Can Help

In this complex and rapidly shifting market, personalized financial guidance is more important than ever. At Willow Private Finance, we specialize in helping high-net-worth clients navigate prime London’s property landscape. Whether you’re:

• A buyer looking to take advantage of today’s value while ensuring your financing is structured with long-term flexibility in mind.
• A seller seeking to position your property strategically (or exploring refinance options) amid increased competition and changing market conditions.
• An investor or landlord weighing the impact of new regulations (e.g. the Renters’ Reform Bill), non-dom status changes, or potential tax reforms on your portfolio and financing strategy.

We provide bespoke, whole-of-market solutions that align with your specific needs and goals. Our team has deep experience arranging prime property mortgages, bridging finance, and tailored lending for luxury real estate acquisitions. We can advise on the optimal financing routes – from locking in an attractive fixed rate ahead of further changes, to exploring equity release for liquidity, to restructuring loans for improved cash flow.

In uncertain times, having an expert partner to guide you through financing decisions is invaluable. Willow Private Finance stays abreast of all market developments (as this report demonstrates) and works closely with private banks, specialist lenders, and mainstream banks alike. Our role is to be your advocate and strategist, securing the best terms and ensuring you’re well-positioned no matter how the market evolves.