London prime property prices dip as Budget raid deters wealthy buyers

Prices for London prime properties remain far below their 2014 peak, with double-digit discounts on asking prices to be found in some areas of the capital.

The average reduction in the original asking price for houses over £1m in Greater London was £200,100, according to Investec, but some areas saw a 11.3 per cent discount. This is far above Investec’s figure for the second half of 2023, which was £159,541.

The average saving last year was 9.2 per cent in Kensington – £313,245 – and 9.7 per cent, or £311,266, in Chelsea.

“Following the chancellor’s inaugural Budget, purchasers in prime central London continue to exercise caution,” Nick Maud, director of residential research at Savills, said.

“However, most outer prime buyers are still benefiting from a stable mortgage market, despite underlying economic headwinds,” he added.

Policy changes announced in the budget include Labour’s decision to continue with Jeremy Hunt’s scrapping of the non-dom regime, higher VAT on private schools, and higher taxes on second homes.

These changes, along with the wider political and economic uncertainty which characterised the country for much of last year, led to price drops across the board for prime property, particularly super-prime homes worth over £20m.

However, discounts are widely expected to cause more activity in the market next year as international and domestic buyers alike are increasingly drawn to comparatively low-priced London homes, particularly those in the outer boroughs like Hackney and Shoreditch.

“Now is the time for buyers to take advantage of some significant price reductions and take the opportunity to secure a prime property in some of London’s most desirable areas,” Carlos Mendes, Private Banker at Investec, said.

Prime property in Hackney and Shoreditch saw gains of 1.7 per cent and 1.4 per cent, respectively, in the last quarter of 2025, according to Savills. The two areas outperformed the wider market’s rise of 0.4 per cent.

However, Savills still expects prime central London values to fall by four per cent overall in 2025 as the market “finds its level in a changed fiscal and regulatory environment”.

But ultimately, Savills added, “improvements to both the UK and worldwide economy will drive future recovery”.

The real estate firm expect prime price growth of 9.6 per cent over the next five years.