Maybe there's a silver lining for brokers though
A pronounced shift is under way in the capital’s most prestigious postcodes, as British families seize the opportunity to enter London’s elite housing enclaves amid falling prices and a sharp decline in overseas demand.
Once dominated by non-domiciled overseas buyers, neighbourhoods such as Belgravia, Knightsbridge and Kensington are seeing a change of guard. Domestic purchasers - long priced out of central London - are now moving swiftly to acquire homes whose values have dipped to levels not seen in over a decade.
The cause? A major rethink by global investors following the overhaul of the UK’s non-dom tax regime. Under new rules introduced in April, wealthy individuals can no longer indefinitely shield their overseas income and assets from UK taxation. The four-year limit on non-dom status, coupled with the extension of UK inheritance tax to global holdings, has prompted many to turn their attention to more favourable tax jurisdictions, such as Italy and France.
“Where a property has been listed for six to 12 months, double-digit reductions mean they are selling,” Stuart Bailey, head of prime central London sales at Knight Frank told The Negotiator.
Indeed, figures from Knight Frank show that sales of prime residential property in London fell by 7 per cent in the six months to May, with a 13 per cent drop in registered interest from prospective buyers over the same period. Properties in Kensington and Chelsea are now selling at their lowest levels since 2013, according to Office for National Statistics data. The downturn is most pronounced in homes priced at £5 million and above, where international buyers have traditionally dominated.
Yet where some see retreat, others sense opportunity.
Estate agents report growing interest from UK-based families previously centred in affluent outer-London areas like Chiswick and Barnes. With price tags in Belgravia slipping below £2,000 per square foot - a rarity in recent years - aspirational buyers are relocating into once-unattainable addresses. “We have seen a lot more domestic market buying in prime central London because some sellers have adjusted prices to the point where they are affordable,” Matt Thompson, head of sales at Chestertons reported to the Financial Times.
Chestertons reports average reductions of around 5% since the beginning of the year - equivalent to hundreds of thousands of pounds on top-tier properties. According to data researched for the FT by property analytics firm TwentyCi, the number of price cuts in prime London exceeded 700 in the year to May, with transaction timelines extending significantly: properties are now taking an average of 216 days to sell, compared to 144 a year ago.
“With elite international buyers considering other locations, such as Milan or Paris, opportunities have opened for UK families to buy into more exclusive London postcodes,” Lucian Cook, director of residential research at Savills said to the FT. “The balance of demand is changing and this is probably the biggest change in the prime market.”
For mortgage brokers, the shift carries notable implications. With fewer cash-rich international clients in play and more domestic borrowers financing purchases through traditional lending routes, appetite for high-value, high-LTV products is expected to rise. Brokers with strong networks in the capital’s family home market may find a fertile client base among those upsizing into central London while conditions remain favourable.
Though tax reform has driven international capital elsewhere, it has also opened the door for British buyers to reassert themselves in the prime segment. For the first time in years, London’s most illustrious addresses are not just for the global elite - but for the well-positioned domestic buyer, too.
