2nd May 2025
9mins
The first three months of the year have been a hectic time for London’s PCL estate agents. The number of homes sold in Q1 2025 was up a massive 29.9 per cent compared to the same period in 2024 according to the latest analysis by house price monitor LonRes.
The number of homes under offer is also up – almost seven per cent higher than last year.
And the number of new homes coming onto the market jumped by 14.6 per cent year on year.
But despite all this frenzied activity buyers are cautious – and as a result average sale prices continue to fall as buyers negotiate hard to avoid overpaying. Prices today are 2.7 per cent lower than they were a year ago.
Tom Kain, a partner at Black Brick, said that the 2025 market had a strong start in January and February, but has since faltered – a fact he blames squarely on external influences. “It seems like concern about the Trump tariffs has started to filter through,” he said.
Camilla Dell, founder and managing partner at Black Brick, agrees with the old adage that when the United States sneezes the entire world catches a cold. “A lot of people have lost money in the markets, so buyers are feeling a bit poorer and generally more unsettled,” she said.
The other issue is the end of the non dom tax regime at the start of April. Figures from HM Revenue and Customs show that capital gains tax revenues fell by 10% down to £13.05 billion from £14.49 billion in the 12 months to March 2025. The fall has been blamed on a stream of wealthy individuals leaving the UK in search of more beneficial tax regimes elsewhere in the world.
Headline price performance can be a useful indicator of the overall health of a property market, but it also disguises a more granular reality.
Like LonRes, international estate agency JLL reports a drop in prices in PCL in the past year – with one exception.
Homes in the £10m-plus market have increased by 1.1 per cent compared to the first quarter of 2024, the only price bracket to record any annual growth. Buyers at this level tend not to be reliant on mortgage finance, which means that interest rates are not an issue, and their investment strategy tends to be long term which means they are prepared to overlook the current global political and economic insecurities for a property they really, really want.
The other strong-performing market is the sub-£2m market, where transactions have jumped more than 20 per cent compared to last year. Deals at £2m or less accounted for 70 per cent of the total property transactions made in Q1 2025.
This is, said JLL, the first time in a decade when sub £2m properties have played such an important role in the prime London property market.
And there are signs that the demand in this price bracket will soon translate into price growth. Although prices are down year on year, the size of annual price drops has been falling quietly over the past year. In June 2024, the sub £2m market was recording annual price falls of -7.2%.
Another emerging trend in London’s property market is that outer London property is performing considerably stronger than central London.
Prices in this primarily domestic, owner occupier market grew by 0.7 per cent in the past year, reports Savills, with houses outperforming apartments.
The price of houses increased 1.2 per cent – a slender performance, admittedly, but in the context of London 2025 impressive – with the strongest growth in north and east London, from Hackney and Shoreditch to Islington. Flat sale prices increased by a marginal 0.2 per cent.
“There has been a trend where people have been missing out a few steps on the property ladder,” explained Dell. “Instead of buying a studio or one bedroom flat they stay at home for longer and save up and then they go and buy a small Victorian family house in the suburbs where they can stay almost indefinitely.”
As well as wanting to avoid making repeated Stamp Duty payments for multiple small moves up the housing ladder, bad publicity about sharply increasing service charges and ground rents, had also served to discourage buyers from buying leasehold apartments altogether.
“There has been this dynamic shift towards people buying a three or four bedroom terraced house as their first home, and it’s because of this that is where I think the biggest price growth will come,” said Dell.
Stimulating house building is one of the Labour Government’s key policies, with a target of building 1.5 million more homes over its term.
Local councils have all been set building targets, with London charged with building 88,000 new homes every year
Early indications are not positive. New figures show that there were just 1,201 housing starts in the capital during January, February, and March 2025 – and none at all in 23 of the 33 boroughs according to Molior London’s latest snapshot of residential delivery across London.
Kain blames the slow-down on simple economics. Building costs are high and demand is subdued. Housebuilders are voting with their feet and mothballing sites until conditions change and they feel they can make a profit.
Political embarrassment aside, the slow down means that by 2027 or 2028 there will be a real shortage of new homes for sale. And since central London councils have already cracked down on the building of “superflats” – properties measuring more than 2,000 sq ft – the shortage will be particularly pronounced at the top end of the market.
“You are talking about some of the most expensive real estate in London which trades at significantly higher premiums than most flats or houses,” said Dell. “The silver lining is that if you buy now you are buying into something that has the potential to become a very rare asset class, particularly in the best parts of prime central London.”
Making sure you don’t buy the wrong house
Camilla Dell is a guest expert on the latest episode of the Bloomberg UK financial podcast, Merryn Talks Money, hosted by columnist Merryn Somerset Webb and Money Distilled author John Stepek. “Going into the property market without a buying agent is a bit like going to court without a lawyer,” says Dell. “You’d never dream of representing yourself, and yet when it comes to buying property, which is often one of the most significant and largest financial commitments that somebody will do in their entire lifetimes, people tend to do that without proper representation.”
To hear her views on how to navigate the property market and the benefits of engaging a buying agent versus going it alone, click here.
2025 London Property Market: Expert opinions and emerging trends
Dell’s market expertise was also called upon by leading law firm Mishcon de Reya, for its special series of guides to the property market, Inside Residential. To learn more about Dell’s views on the current state of the market and predictions for the future, the influx of American buyers seeking safe haven in the British capital, and demise of the non dom tax regime. Click here to read the article.
Much has been written about the recent influx of American buyers – the so-called “Donald Dashers” who are moving to London to avoid the excesses of President Trump’s second presidential term.
Black Brick was recently instructed to help a die-hard New Yorker find a London flat she intends to spend around three months per year in.
Our client wanted a three bedroom home in good condition, on the upper floor of a building with lift access. Proximity to a park was a priority, and our client had been looking for something in either Marylebone, Notting Hill, or Chelsea.
We persuaded her to broaden her horizons very slightly to include one of the most popular streets in Knightsbridge, half a mile from its world-famous shops, restaurants, and cafes, as well as Hyde Park.
We showed our client a fabulous 4th floor lateral apartment in a prime building on Cadogan Gardens during a 48-hour whistlestop visit to the British capital and she loved it. We were then able to negotiate a £450,000 (8.2 per cent) discount on the asking price as well as introducing our client to the entire professional team – lawyers, surveyors and contractors.
We helped our client buy this unique, ultra-secure loft-style apartment in one of north London’s prettiest urban villages back in 2008. When they decided to part with it they came back to Black Brick to ask us to manage its off-market sale.
The property is within a small gated development a short walk from the pubs, cafes, boutiques, and restaurants of Regent’s Park Road, as well as Primrose Hill itself.
The circa 2,400 sq ft property is full of character with 15ft high ceilings, two roof terraces, and an integrated garage. It is a freehold property, which means no dealing with landlords, and triple glazing means it is extremely quiet and peaceful.
Its chic style and fashionable location means it is likely to appeal to a buyer who works in film, media, or music.
If you would like any more information about the property please contact Camilla Dell.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.
