House prices in prime central London have risen for the first time since 2023, new data from LonRes shows.
This, commentators believe, was due to a combination of global and national uncertainties, high buying costs and a general air of caution.
However, LonRes’ data shows that in February, house prices in prime central London achieved their first annual increase (0.6 per cent) on the previous year. Prices, though, were still down by 1.2 per cent on the pre-pandemic average (2017-2019).
Sales of homes priced over £5 million are up
Crucially, LonRes’ data points to a big jump in activity for prime central London homes valued at £5 million or above.
In February, there were 13.8 per cent more transactions at this price point than February of the previous year, and 33 per cent more than the pre-pandemic average.
More sellers in prime central London were putting their homes on the market too, with new instructions up by 30 per cent on February 2024. This is more than double the level of the pre-pandemic average.
Predictably, this means that there are also more prime properties on the market. At the end of February, there were 21.1 per cent more homes valued at £5 million or more for sale than the same time in 2024.
There are more flats for sale at this price range than houses, the data shows. Over the past year, the supply of flats valued at more than £5 million for sale has grown by 31.3 per cent, compared to 11.5 per cent for houses. These figures are 81 per cent and 44 per cent above the pre-pandemic average.
“It is worth noting this is not a market that is roaring away,” cautions LonRes’ head of research, Nick Gregori. “Peak activity levels for the £5m-plus market were back in 2021to 2022 and it’s a market that has been slowing ever since.”
He continues: “The main headline for February was that sales values across prime London recorded an annual increase for the first time since June 2023. While it’s only a single month of data and a small rise (+0.6 per cent), a sign of return to growth might motivate buyers to become more active. This in contrast to a long period where demand has been depressed by fears of further price falls.
“However, the number of homes on the market is likely to mitigate against significant price growth, with 11.6 per cent more stock for sale than a year ago meaning buyers have more choice and therefore more negotiating power. Transaction levels for the year so far are broadly in line with the same period in 2024, but under offers are up significantly, potentially indicating rising activity in the coming months.
“The outlook for values over the remainder of 2025 also continues to be impacted by expectations around borrowing costs. Recent reductions in mortgage rates have led to improving mainstream property markets around the UK, potentially boosted by the ending of a stamp duty discount. While the prime London markets are less directly affected by these factors, they do feed into wider positive sentiment. However, rising inflation in the UK may slow the pace of future interest rate cuts.”
Popular prime London areas
New developments like 60 Curzon have boosted transactions in Mayfair
Jason Alden/Bloomberg
According to LonRes, this rise in activity is relatively evenly distributed across central London postcodes, but three areas are seeing particular demand: Mayfair, Bayswater and Maida Vale.
A report from Mayfair-based estate agent Wetherell shows that the area had 93 sales of “second-hand” homes in 2024, of which almost 30 per cent were priced over £5 million.
Last year, likewise, Mayfair had more £20 million-plus sales than any other part of central London.
According to Wetherell, Mayfair’s sales have been boosted by a small number of luxurious new developments, including Three Kings Mayfair, which is almost 65 per cent sold out, and 60 Curzon, where half of all available properties have sold. 1 Mayfair, which is scheduled for completion in 2026, has also built up a waitlist of potential buyers.
At 60 Curzon, US buyers represented the largest purchasing group, while the £8.995 million penthouse at Three Kings Mayfair also sold to an American buyer.
Bayswater’s popularity has also been bolstered by high profile new development. According to data from LCP Private Office, Bayswater was the best performing prime central London “village” across the last year in terms of its combined price growth across both flats and houses. Flats grew by 1.4 per cent in value, while houses increased by 4.5 per cent.
This, the agency says, is partly due to the £3 billion regeneration of Queensway, including the redevelopment of The Whiteley.
One contributing factor to the boom in prime property prices is the growing influx of US buyers. In 2022, American buyers alone accounted for £620 million of property sales, and their influence has continued to grow, thanks to the pound’s weakness against the dollar and the polarising impact of Donald Trump’s election victory last year. Currently, US buyers have a discount of around 38 per cent in prime central London, compared to July 2014, says Knight Frank.
In the final quarter of 2024, for example, US nationals represented 11.6 per cent of overseas buyers in prime central London, according to data from Knight Frank. This put them as the largest overseas buying group.
“Demand from American buyers has been building steadily during the last 12 to 24 months and they now account for almost 30 per cent of our clients. London’s culture, world-class education system and strong legal and financial framework are a powerful draw, as well as the absence of gun crime,” says Jo Eccles, founder of buying agency Eccord.
“Where Americans typically used to rent for prolonged periods before putting down roots, they are now more likely to commit to purchases straight away. Currency discounts of 10 per cent are a motivating factor driving this trend. They fall largely into two categories: buyers spending £2 million to £6 million on a London base, and families relocating and putting down long-term roots in London with budgets of £10 million upwards.”
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