The Prime Central London market is the most ‘anxious’ it’s been for over a decade, according to London property broker Black Brick.
Much of the anxiety steps from the departure of wealthy elites due to the end of the non-dom tax regime in April – which is pushing down prices.
There is speculation that the Chancellor could u-turn on imposing inheritance tax of 40% on resident’s worldwide assets, given that the loss of wealthy elites is cutting down tax receipts.
Camilla Dell, managing partner at Black Brick, said: “I don’t think this will suddenly bring back people who have already left – unless they are having a horrible time elsewhere.
“Relocation is not for the fainthearted, it is not an easy thing to do and it is not cheap. But it may stop people who are thinking about going, and it will be good for sentiment.”
She added: “I think that people are just really nervous about the fall out of all the wealthy people leaving.
“Buyers are nervous about catching a falling knife. Our buyers at the £10m, 15m, 20m level totally get that it is a buyers’ market, but they are wondering how much further prices will fall.”
According to Knight Frank – which earlier this year cut its price growth projection for PCL from 2% to 0% – the change created a £401m Stamp Duty black hole in the year to May, thanks to a collapse in the number of £5m+ sales in central London, down 14% year-on-year.
The newly-published Henley Private Wealth Migration Report 2025 found that the UK will lose 16,500 millionaires this year, the largest net outflow of high-net-worth individuals experienced by any country since the firm began tracking millionaire migration a decade ago.
A number of factors have served to dampen the property markets for investors in recent years: Stamp Duty hikes on second homes introduced in 2014 and 2016, Capital Gains taxation, and a ban on offsetting mortgage interest payments against tax.
Transaction levels are 36% below levels seen in May 2024, and the number of homes under offer is also falling.
Despite this, Black Brick said some investors are returning to London property as a result of falling prices and rents.
Tom Kain, a partner at Black Brick, notes that investors can find properties which will offer a gross yield of around 5%, which is not only a little more than they would earn by simply putting their assets into a savings bond but gives them the hope of capital growth down the line.
Ironically jitters amongst owner occupiers are fuelling this trend.
People who could quite easily afford to buy a London property are increasingly looking to rent while they get to know the city and await a return to price growth before putting down roots.
Amidst a backdrop of falling prices, there are a couple of neighbourhoods in PCL seeing prices continue to grow.
Postcode level analysis, again from Lon-Res, has found that South Kensington and a swathe of the West End (Fitzrovia, Bloomsbury and Soho) both appear to have turned a corner with prices starting to climb in the past year.