Impact of recent and potential future tax changes felt across London’s super prime housing market
Last quarter, we reported that the top end of the market in London was bolstered by the residual activity of late 2024. But the subsequent three-month period to June saw more muted activity, as the full impact of October’s Budget announcements were properly absorbed. The unravelling of the ‘non-doms’ tax status and the burden of an additional stamp duty surcharge for second home purchases have both tempered the appetites of super prime buyers. These factors, in conjunction with the possibility of further tax increases in the upcoming Autumn Budget, have contributed to a ‘wait-and-see’ mentality.
This has been reflected in the lowest volume of sales for the first half of a year since the start of the pandemic in 2020, with sales at £5 million and above down by -8% compared to the first six months of last year. The total value transacted between these periods was also down -14% over the same period, from £2.24 billion to £1.93 billion. And, at £10 million and above, the landscape is more challenging, with volumes down -14% in the first half of this year compared with last year – albeit, this movement is driven by the relatively small number of sales involved, with 56 taking place this year compared with 64 over the first six months of 2024. In isolation, Q2 2025 saw the lowest number of sales for a second quarter since 2017, again discounting 2020 when the first Covid lockdown was in place.
But, even as the pandemic recedes further into the past, the period immediately preceding it still serves as a useful benchmark. Compared with the average for the first half of a year between 2017 and 2019, the number of sales at this price point was 18% higher this year, and the total amount spent 4% higher. Meanwhile, the volume of purchases at £10 million and above is roughly at parity with this historic average, sitting at 1% above.
Trends behind the data
In the first half of the year, Belgravia remains the most active super prime market, accounting for 12% of sales at £5 million and above; this is also the case at £10 million and above, where it accounts for 18%. Chelsea has risen to second place at 11%, overtaking Kensington, which is now third at 10%. All of these locations offer a timeless appeal to both domestic and international households.
Elsewhere, while the proportion of super prime sales is still weighted towards houses, flats in the first half of 2025 represented their second-highest share in ten years, accounting for 44%. The share was only higher during the start of the pandemic in 2020, when it accounted for 45%. This supports anecdotes from our agents that buyers are opting for more manageable turn-key solutions, located in the most sought-after postcodes, during this more cautious period.
OUTLOOK
The next major Budget in October will provide much-needed clarity on the Treasury’s strategy for taxation across the board, but more specifically with regard to high earners, high-net-worth individuals, and those with residential property interests across the globe. This fiscal event represents a symbolic threshold and activity may continue to remain muted in the run-up to it. However, we expect motivated buyers searching for smartly presented homes to continue to transact, particularly in an environment where the average price across prime central London is down -22% on its last peak.
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