Overall demand for prime property steadied in the third quarter of the year on sales of mansions in south west boroughs, while central London sales fell.
Prices have slumped by around a fifth in the past decade due to low demand, while an exodus of high net worth individuals and uncertainty around property taxes has so far delayed a recovery in the market.
Overall, prime London properties – classed as those valued above £2m – saw a 0.2 per cent uplift in demand year on year.
This slight improvement was driven by properties valued between £2m to £10m in Putney, Barnes, Islington and Wandsworth.
On an annual basis, Putney, Wapping, Chiswick and Wandsworth saw the biggest increases in demand, with the first two areas clocking double-digit increases.
Meanwhile, demand for central London properties continued its long slump, with Fitzrovia clocking a 25 per cent decline in demand and Victoria a 12.2 per cent drop.
Average prices in prime central London fell by 3.6 per cent in the year to September, the steepest decline since February 2021, Knight Frank found, while prices rose by 0.1 per cent in outer London.
Property exchanges drop in central London
The number of exchanges in prime central London was down by 10 per cent in the third quarter compared to the five-year average, according to Knight Frank.
Chelsea and Kensington bucked the trend, with a six per cent and 5.6 per cent rise in demand, respectively.
“The latest figures show that demand across London’s prime and super prime markets has steadied following a more turbulent start to the year, although we’re yet to see any significant momentum build,” Marc von Grundherr, director of Benham and Reeves, said.
“South West London continues to dominate… thanks to the combination of value, space and lifestyle they offer compared to the core Central London market,” he added.
Part of the reason this is happening is that London has seen a decline in demand from overseas prime buyers, opening the market up for young Brits, who are more likely to look for a suburban family home rather than a central pad.
The end of the non-dom regime, which had provided an inheritance tax loophole for non-doms, has been a key driver of international movement as financial climates like Dubai, Milan and Monaco become ever-more attractive.
Beauchamp Estates analysis has found that 70 per cent of the vendors of £15m plus London homes selling during the first half of 2025 were non-doms in the process of moving overseas.
Leslie Macleod-Miller, chief executive of Foreign Investors for Britain, said wealthy foreign investors will be closely watching what the government does next, urging it to introduce an Italian-style flat tax and an investor visa.
“Failing to act risks more wealth leaving Britain’s shores, tax burdens shifting onto ordinary citizens, and growth being generated abroad,” he said.