London’s most prestigious property market has seen values tumbling nearly a quarter since their peak at the close of 2014.
Homes in the capital’s prime central areas, defined as those selling for £4.5million or above, have shed up to 24.5 per cent of their worth over the past decade, research from estate agency Savills reveals.
This year alone witnessed a 4.8 per cent fall in average prices within the bracket.
The final three months of 2025 proved particularly challenging, with values slipping a further 0.9 per cent.
A succession of tax measures that have fundamentally altered the landscape for wealthy purchasers in the capital, industry analysts have said.
Successive chancellors have introduced a raft of fiscal measures since 2016 that have weighed heavily on the upper echelons of the market.
Foreign purchasers acquiring additional properties now face stamp duty charges of up to 19 per cent.
For a £5million residence, this translates to a tax bill of £863,750.
Chancellor Rachel Reeves delivered a further blow in April when she scrapped the non-domicile tax regime, which had previously permitted wealthy residents to shield their overseas earnings from British taxation.
The abolition has created what experts describe as a hiatus at the market’s summit.
London’s most prestigious property market has seen values tumbling nearly a quarter
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Income tax levied on property earnings has also risen by two percentage points, adding yet another pressure point for investors in this segment.
An estimated 1,800 non-domiciled residents left Britain in 2025 seeking refuge in more favourable tax jurisdictions.
Dubai, Abu Dhabi, Milan, Monaco and Geneva have emerged as the preferred destinations for this wealthy exodus.
Among the 41 mansions and luxury apartments sold in London this year at prices exceeding £15million, some 65 per cent were offloaded by non-doms seeking to escape substantial tax liabilities, according to Beauchamp Estates.
The highest value homes in London have been targeted by the Chancellor
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The majority of buyers were overseas purchasers acquiring holiday residences, with intentions to spend merely a few weeks annually in Britain.
From 2028, properties valued at £2 million or above will face council tax increases of up to £7,500 annually under the so-called mansion tax announced in last month’s budget.
This measure is anticipated to suppress demand further within this price bracket.
Demand on London’s prime property remains “thin on the ground”
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Frances McDonald, director of research at Savills, offered a sobering assessment: “Demand remains thin on the ground in more rarefied prime central London postcodes, with the pool of buyers already much shallower since the end of the non-dom regime.”
She added: “Much of the budget’s impact on prices had effectively already been built in after rumours started circulating late summer.
“But it will take some time for the market to fully absorb the changes, with moderate falls expected to continue in the new year.”