Prime London property costs to backside out this 12 months however restoration will solely start in 2028

Prime central London house prices are expected to bottom out this year, according to the property firm, Savills.

It says homes in the most expensive parts of the capital will fall by 2 per cent this year on average before staying completely flat in 2027.

After that, the property firm expects prices to begin rising again. It says by the end of 2030, prime central London homes will be 8.1 per cent higher than they are today.

Prime central London includes areas such as Chelsea, Kensington, Mayfair, Notting Hill and Marylebone. 

While by no means a boom, it will represent a turnaround in central London’s property market in the midst of a decade long decline in prices.

Values across London’s most rarefied postcodes fell by 4.8 per cent last year, according to Savills, leaving prices 24.5 per cent below their 2014 peak at the end of 2025.

Transactions involving homes worth £5million or more also fell 11 per cent throughout 2025, according to Savills.

Not out of the woods yet: Prime Central London is expected to experience a further modest drop in values in 2026

Meanwhile, savills expects the prices of expensive homes in outer London to stay flat this year before rising 1 per cent in 2027 and 12 per cent by the end of 2030.

It defines prime housing markets as the top 5 to 10 per cent of the market in each region. This translates to a property price of £4.5m in central London and £1.85 million elsewhere. 

It’s worth pointing out that these forecasts apply to average values in the second hand market, new build values may not move at the same rate.

Why Prime London prices are about to turn a corner

With the long-anticipated Budget out of the way, greater certainty is expected to support values in 2026 and beyond, according to Savills’ view.

The forecasted growth is expected to add £406,000 to a £5 million property by the end of 2030.

In the Budget in November, Chancellor Rachel Reeves targeted owners of expensive homes with the biggest change to council tax in three decades.

From 2028, properties in England worth more than £2million will face a surcharge on top of their council tax, dubbed a ‘mansion tax’.

The high‑value council tax surcharge, starts at £2,500 per year above £2million and goes all the way up to £7,500 for the most expensive properties. It will rise by inflation each year.

Prime markets furthest from London forecast to see the highest price growth over the next five years

However, Frances McDonald, director of residential research at Savills does not expect this to have much impact on central London property values going forward.

‘The November Budget delivered a better-than-feared outcome for top-end buyers,’ says McDonald.

‘The new high value council tax surcharge is unlikely to have much of a direct impact on these markets, especially with much of the impact already priced in following falls to values in the lead up.

‘Now, with greater clarity for buyers and sellers, we are seeing early signs that activity is beginning to pick up as buyers take advantage of more certainty and of where values sit.’

However, McDonald also thinks changes to the tax and regulatory environment will cause prices to improve gradually, rather than experiencing a significant bounce. 

She says: ‘Despite global wealth continuing to grow, it remains reluctant to find a home in London in the current tax and regulatory environment. 

‘Combined with an already shallower pool of buyers following the end of the non-dom regime, there is little to suggest a return to growth this year, with more modest price movements expected ahead.’

Savills is forecasting slightly stronger growth for outer prime London, with the market more influenced by the cost and availability of mortgage debt.

However, continued pressure on prices in central London will also mean a lack of trickle-down growth that is typically expected during the early part of a recovery.

Interestingly, the property firm thinks prime regional second-home hotspots are the most likely to recover. This includes the larger country house market, where prices have fallen in recent years.

It expects average values to rise 1.6 per cent this year with values 17.6 per cent higher than they are today by 2030.