Savills’ have released their Q4 2024 analysis of the UK’s prime property markets.  It can be seen here and in summary:

Key Highlights for Q4 2024

1. Impact of Fiscal Changes on Prime Markets:
   • The Chancellor’s tax-raising Autumn Budget created caution among buyers and sellers, especially in prime markets.
   • Demand was primarily driven by needs-based buyers, while investors and second-home purchasers retreated.
2. Prime Central London (PCL):
   • Price Decline: Values fell by 1.9% annually and 0.8% in Q4 due to tax changes, including the winding down of the ‘non-doms’ tax regime and Stamp Duty surcharges.
   • Performance by Area:
     • Largest Q4 declines: Knightsbridge (-2.0%), South Kensington (-1.6%), Belgravia (-1.5%).
     • Resilience: Marylebone and Notting Hill withstood price pressures.
   • Long-term View: PCL prices are 20.7% below their 2014 peak, offering value for opportunistic buyers.
3. Outer Prime London:
   • Annual Growth: Prices rose by 1.4%, supported by stable mortgage rates and domestic demand.
   • Q4 Growth: Marginal increase of 0.3%, led by Hackney (+1.7%) and Shoreditch (+1.4%) as these markets mature.
4. Prime Markets Outside London:
   • Marginal Decline: Prices fell by 0.2% in Q4 as the ‘race for space’ trend stabilised.
   • Suburban Strength: Well-connected suburban areas saw price growth despite overall market softness.

Outlook for 2025

1. Prime Central London:
   • Price Forecast: Values expected to decline by 4% in 2025 but grow by 9.6% over five years as the market adjusts to fiscal and regulatory changes.
   • Persistent challenges due to international buyer sensitivity and higher taxation.
2. Outer Prime London:
   • Flat Performance: Values projected to remain stable in 2025.
   • Long-term Growth: Forecasted 14.7% growth over five years, driven by domestic demand and affluent upsizers seeking value and proximity to schools.
3. Wider Market Sentiment:
   • Stable mortgage rates and potential base rate cuts in 2025 are expected to support needs-based demand.
   • The ripple effect from central London may benefit outer markets.

Analysis

The UK’s prime property markets are navigating a period of adjustment, shaped by fiscal changes, evolving buyer demographics, and economic uncertainty. While price pressures are most pronounced in central London, opportunities remain for buyers with a longer-term outlook. Outer prime London and well-connected suburban markets appear better positioned for growth in the coming years.