The Prime Central London (PCL) property market in 2024 experienced its share of turbulence, shaped by political shifts and economic uncertainty. Yet, London’s enduring appeal and robust foundations stood firm. As we look ahead to 2025, a renewed sense of stability and optimism is emerging, presenting fresh opportunities for buyers and sellers alike.

Political and Economic Challenges

The year brought its challenges. The UK general election prompted a temporary pause as buyers and sellers waited to assess potential policy changes. Shortly after, the autumn budget introduced revisions to non-domiciled tax rules, prompting some high-net-worth individuals and overseas investors to reconsider their strategies. Adding to this was the impact of the additional 2% Stamp Duty surcharge for second-home owners, which tempered some appetite for new acquisitions.

Meanwhile, persistently high interest rates placed further pressure on the market. Elevated borrowing costs continued to impact affordability, leading many prospective buyers to reassess their purchasing power or delay property transactions. Mortgage repayments, significantly higher than in the low-rate environment of previous years, were an ongoing factor in this cautious sentiment.

Despite these headwinds, PCL demonstrated remarkable resilience. Even during periods of hesitation, demand for exceptional properties remained consistent. Buyers with a long-term perspective recognised London’s status as a global investment and lifestyle hub as unshakable. Temporary market fluctuations were viewed as opportunities rather than deterrents.

A Buyers’ Market with Distinct Winners

In 2024, market conditions favoured buyers. Price adjustments offered opportunities for astute investors, with downward pressure making London look increasingly attractive in terms of value.

However, the market revealed a clear trend: the very best properties continued to command attention and drive transactions. From grand period homes to contemporary apartments featuring state-of-the-art amenities, “best-in-class” properties remained in high demand. London’s unique combination of world-class culture, top-tier education, and unparalleled lifestyle offerings ensured these homes retained their allure among discerning buyers seeking quality and exclusivity.

Neighbourhoods such as Knightsbridge, Chelsea, and Mayfair maintained their prestige, particularly for buyers prioritising privacy, security, and prime locations. Simultaneously, new developments offering hotel-inspired amenities—from wellness facilities to sustainable designs—appealed to forward-thinking buyers, reflecting the evolving priorities of the luxury market.

Growing Demand for Luxury Rentals

While some buyers exercised caution in 2024, the rental market witnessed a surge in demand, particularly for luxury properties. International clients increasingly opted to “test the waters” in London by renting before committing to a purchase. These tenants often gravitated towards premium neighbourhoods offering convenience, security, and lifestyle-enhancing features such as concierge services and proximity to cultural landmarks.

For many, renting provided an ideal way to experience London’s distinct character while exploring different areas before making a long-term investment. This trend underscored the market’s adaptability and reaffirmed the enduring appeal of high-quality properties, whether for rent or purchase.

Looking Ahead: A Clearer Path Forward

As the uncertainties of 2024 begin to settle, 2025 is set to bring renewed confidence. The political and economic landscape, including the much-discussed changes to non-dom rules, has now stabilised, enabling investors to make clearer, more informed decisions.

Signs of increased activity are already emerging. Buyers who had been on the sidelines are returning to take advantage of competitive pricing, while sellers are adapting to meet market expectations. Properties that are well-priced and impeccably presented are capturing attention in this increasingly discerning market.

Michael Harte - A new Assistant Manager for Harrods Estates

HARRODS ESTATES