Ashley Wilsdon, Head of London Buying, offers an in-depth analysis of the current trends in London’s prime property market.
How might the price-sensitive market impact buyer behaviour and transaction trends in the coming months?
The past two years have presented significant challenges across Prime Central London (PCL). The market has been needs-driven (buyers with genuine motivations to move), while high interest rates and uncertainty around potential taxation changes have deterred discretionary buyers. Consequently, transaction levels have remained low.
However, a shortage of inventory has kept capital values robust and relatively unchanged. In more domestic markets, such as Battersea and Islington, properties priced between £2 million and £4million continue to perform well, partly supported by the “bank of mum and dad.” At the higher end of the market, there has been a consistent flow of transactions exceeding £20 million.
Regardless of the price point or location, it’s a price-sensitive market.
How might focusing on specific asset classes, rather than broader geographic areas, improve the accuracy of property investment strategies in a market as diverse as PCL?
Historically, agents have forecasted that PCL house prices would rise between 15% and 25% over five years. However, the past decade has shown that such forecasts are, at best, educated guesses that often fail to account for unforeseen events.
A more prudent approach might be to focus on specific asset classes rather than entire areas. For instance, a lateral apartment in Chelsea will likely outperform a townhouse in Belgravia due to basic supply and demand dynamics; there is one apartment in Chelsea for every twenty houses in Belgravia.
How might the increased second home surcharge and recent tax reforms, such as changes to CGT and VAT, influence the negotiation dynamics between buyers and sellers in the London property market?
Recent tax reforms in the UK, including changes to Capital Gains Tax (CGT) and the introduction of VAT on private school fees, are not anticipated to impact the London property market significantly. Similarly, the second home surcharge increase is unlikely to deter buyers; instead, purchasers may adjust their offers to account for the additional 2% cost, effectively transferring some or all of this burden to vendors in the short term.
This year’s major development is the abolition of the non-domiciled (non-dom) tax regime, effective April 2025. While it’s too early to assess the impact fully, many clients wish to remain in the UK, but they may reduce the time they spend in the country to mitigate tax implications.
How does the approach of positioning clients as the best buyers enhance their chances of transacting on best-in-class properties?
Best-in-class properties consistently perform strongly, even in challenging markets. As buying advisors, our role is to navigate competitive scenarios effectively. Our primary goal is to be the first—and ideally, the only—buyers to view a property. When exclusivity isn’t possible, we strategically position our clients to ensure they are perceived as the most desirable buyers, even when they may not be the highest bidder.
Can you comment on new builds? The supply? Which schemes are selling well, and which ones are struggling?
Many developments along the Thames face challenges due to a slowdown in overseas investment, leading to increased supply and slower sales. In contrast, super-prime developments, particularly branded residences like The Whiteley and The OWO, have almost sold out entirely, with no new inventory on the horizon.
