International

London’s ultra-prime housing market slows as buyer caution rises ahead of Budget

Tuesday, 28 October 2025 5:06AM UTC

Activity in London’s luxury property segment above £5 million has dipped amid political uncertainty and tax concerns, though demand from domestic buyers and affluent investors persists, with Kensington leading the resurgence in ultra-prime sales.

Activity in London’s high-end housing market, particularly for properties priced above £5 million, remains subdued amid growing anticipation ahead of the upcoming Budget, according to property firm Savills. Their latest analysis reveals that Q3 2025 saw just 93 sales in this segment, marking an 18% decline from the same period in 2024. Despite this dip, the market remains notably buoyant compared with pre-pandemic levels, with transactions 72% higher than 2019 figures. However, spending on homes over £5 million has dropped 15% year-to-date, largely dragged down by a significant decrease in sales of properties exceeding £10 million.

Frances McDonald, director of residential research at Savills, explained that while the summer is usually quieter for London’s ultra-prime market, recent months have shown a sharper slowdown, especially at the very top end. She observed that demand for properties priced between £5 million and £10 million is only slightly down, but sales above £10 million have weakened more markedly. This trend is partly attributed to the shrinking pool of buyers following the end of the non-dom regime. Many potential purchasers are now adopting a cautious wait-and-see approach until the government’s forthcoming Budget clarifies the tax landscape. Nonetheless, McDonald highlighted persistent interest from opportunistic buyers eager to capitalise on any attractive valuations.

Geographically, Kensington has emerged as the leading hub for ultra-prime sales, accounting for 12% of transactions over £5 million, overtaking Chelsea and Belgravia, which each hold 10%. These traditional prime central London areas, including Mayfair, together represent 42% of high-value sales so far in 2025, down from 48% last year. This indicates a diversification of buyer interest into neighbourhoods such as Notting Hill, Bayswater, South Kensington, and Marylebone. Richard Gutteridge, co-head of Prime Central London at Savills, noted that domestic purchasers—often seeking main residences—are increasingly active, benefiting from softer prices and reduced competition. This shift has led to stronger demand for second-hand houses typically less popular with international investors.

Despite a modest increase in unsold stock, there has been no flood of new listings since the new government's initial Budget, reflecting the enduring appeal of London’s prime property market. Gutteridge also pointed to ongoing multi-million pound transactions exceeding £30 million for exceptional homes, underscoring London’s lasting attraction to global elite buyers, even amid market fluctuations.

Looking back, the market demonstrated resilience in the latter part of 2024. In Q4 of that year, £5 million-plus sales in London increased by 25% from the previous quarter, reaching 128 transactions with a total value of £1.59 billion—the highest since 2019. This strong finish implied renewed buyer confidence despite earlier caution due to political uncertainties and tax changes.

More broadly across 2025, the UK property market has experienced a notable decline in asking prices, with July witnessing the sharpest drop for that month in over two decades. An average fall of 1.2% brought prices to around £373,709, attributed primarily to greater property availability rather than a broad market downturn. Despite this, sales agreements rose by 5% year-on-year, signalling robustness amid shifting conditions.

Looking ahead, forecasts from Capital Economics suggest London’s house prices could outperform the rest of the UK, with an expected increase of around 6.5% over the next year, compared with a 5% national average. Factors driving this outlook include falling mortgage rates, easing lending criteria, and restricted housing supply in London. However, some analysts warn that affordability issues and uneven demand across different parts of the capital may temper this growth.

Meanwhile, in prime London zones, recent data from Savills indicates a degree of resilience despite the pre-Budget jitters over potential property tax reforms. New listings even rose 4% in Q3 2025, signalling some seller confidence. Price declines have been modest in outer prime areas, with falls contained to around 0.7% over three months, suggesting stability within certain market segments.

In summary, while the top tier of London’s luxury housing market has slowed amid policy uncertainty and buyer caution, particularly above £10 million, there remains substantial underlying demand. Domestic buyers are stepping forward as some international interest wanes or shifts, and pockets of exceptional properties continue to attract ultra-high-net-worth individuals. The upcoming Budget will be a critical milestone to watch, potentially shaping the market’s direction for the remainder of the year.

📌 Reference Map:

Paragraph 1 – ^[1] (Property Investor Today), ^[2] (Savills Q3 2024 report)
Paragraph 2 – ^[1] (Property Investor Today)
Paragraph 3 – ^[1] (Property Investor Today)
Paragraph 4 – ^[1] (Property Investor Today)
Paragraph 5 – ^[1] (Property Investor Today), ^[3] (Savills Q4 2024 report), ^[4] (Savills news)
Paragraph 6 – ^[5] (MoneyWeek data), ^[1] (Property Investor Today)
Paragraph 7 – ^[6] (Capital Economics forecast), ^[1] (Property Investor Today)
Paragraph 8 – ^[7] (Savills Q3 2025 report), ^[1] (Property Investor Today)

Source: Noah Wire Services

More on this

https://www.propertyinvestortoday.co.uk/breaking-news/2025/10/budget-fears-killing-high-end-housing-market-in-london-savills/ - Please view link - unable to able to access data
https://www.savills.com/research_articles/255800/368840-0 - In Q3 2024, London's £5 million-plus market saw 102 sales, a 52% increase over the pre-pandemic average. However, this was a 15% decrease from Q2 2024 and a 34% drop from Q3 2023. The market remained resilient despite political uncertainties and tax speculations affecting high-net-worth individuals. Domestic buyers, particularly those using mortgages, continued to represent a significant portion of these transactions. The data highlights the market's adaptability amid changing economic and political landscapes.
https://www.savills.co.uk/research_articles/229130/372331-0 - Q4 2024 experienced a 25% increase in £5 million-plus sales in London, with 128 transactions compared to 102 in Q3. This uptick suggests renewed confidence among buyers despite earlier market caution due to political events and tax changes. The total value of these sales reached £1.59 billion, marking a 50% rise from Q3 2024. The average price for properties above £5 million in Q4 was £11.04 million, the highest since 2019, indicating a strong finish to the year.
https://www.savills.com/insight-and-opinion/savills-news/371979/london-s-%C2%A35-million-plus-sales-jump-up-by-a-quarter-at-the-end-of-2024 - Savills reported a 25% increase in £5 million-plus sales in London during Q4 2024, with 128 transactions compared to 102 in Q3. This resurgence reflects renewed buyer confidence despite earlier market caution due to political events and tax changes. The total value of these sales reached £1.59 billion, a 50% rise from Q3 2024. The average price for properties above £5 million in Q4 was £11.04 million, the highest since 2019, indicating a strong finish to the year.
https://moneyweek.com/investments/property/rightmove-average-asking-prices-slump - In July 2025, UK property asking prices experienced their sharpest July drop in over 20 years, falling by 1.2% to an average of £373,709. Rightmove attributes this decline to sellers offering more competitive prices due to increased property availability, not a market downturn. The number of listings reached a decade high, allowing buyers to be more selective. Despite the price drop, sales agreed were up 5% from the previous year, indicating a resilient market.
https://moneyweek.com/investments/house-prices/london-house-prices-to-outperform-rest-of-uk - Capital Economics forecasts a 6.5% rise in London house prices over the next year, outpacing the projected UK average of 5%. This marks a reversal after nine years of underperformance in the capital. The anticipated rebound is attributed to falling mortgage rates, relaxed lending criteria, and limited housing supply in London. However, some experts remain cautious, citing affordability constraints and uneven demand across different areas of the capital.
https://www.savills.com/research_articles/255800/381550-0 - In Q3 2025, London's prime housing market faced uncertainty due to speculation about potential property tax changes ahead of the November Budget. Despite this, activity levels held up better than anticipated, with a 4% rise in new instructions indicating renewed confidence from sellers. Outer prime London areas continued to outperform, with price falls contained to -0.7% over the past three months and -0.8% over the past year, suggesting resilience in these markets.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative references Savills' Q3 2025 analysis, published on 16 October 2025 ([savills.com](https://www.savills.com/research_articles/255800/381550-0?utm_source=openai)). The earliest known publication date of substantially similar content is 1 November 2024, with Savills' Q3 2024 analysis ([savills.com](https://www.savills.com/research_articles/255800/368840-0?utm_source=openai)). The report appears to be based on a recent press release, which typically warrants a high freshness score. However, the narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged.

Quotes check

Score: 9

Notes: The direct quotes attributed to Frances McDonald and Richard Gutteridge are consistent with their statements in the referenced Savills reports. No discrepancies or variations in wording were found, indicating the quotes are accurately reproduced.

Source reliability

Score: 9

Notes: The narrative originates from Property Investor Today, a reputable UK-based property news outlet. The primary data is sourced from Savills, a well-established real estate services provider. This strengthens the reliability of the information presented.

Plausability check

Score: 8

Notes: The claims regarding the subdued high-end housing market in London align with recent analyses from Savills, which highlight a decline in £5 million-plus sales and a cautious market outlook due to anticipated tax changes. The narrative's tone and language are consistent with typical property market reporting, and the inclusion of specific data points adds credibility. However, the report lacks specific factual anchors in some areas, such as detailed figures on the impact of the non-dom regime changes, which could further substantiate the claims.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative presents current and relevant information sourced from reputable entities, with accurate quotes and consistent data. While some areas could benefit from additional specific details, the overall content is credible and aligns with recent market analyses.

London property market
Luxury real estate
High-end housing