Demand for London’s Luxury Homes Fell in the First Quarter

The appetite for London’s most luxurious homes waned during the first few months of this year, according to a report Tuesday from Benham and Reeves. 

Across the city, buyer demand dropped for both prime homes, those asking between £2 million and £10 million (US$2.5 million and US$12.5 million), and super prime homes, those asking upward of £10 million, in the first quarter, the lettings and estate agent said. 

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The firm calculates demand based on the proportion of all homes listed for sale across the prime market that have already been sold subject to contract. 

Demand across London’s prime market fell by 1.7% in the first quarter compared to the fourth quarter of last year, with less than one in five (or 19%) of homes listed finding a buyer. 

On an annual basis, demand for such properties was down 1.8%, the report said. 

Across the super-prime London market meanwhile, buyer demand remained largely static on a quarterly basis, falling by just 0.1%. But when compared to the same time last year, super-prime buyer demand has fallen 5.5% annually. 

“We had seen signs that buyers were returning to London’s high-end housing market, but this momentum seems to have stalled during the first three months of this year and it’s likely that this trend could continue with the removal of non-dom status from April next year,” said Marc von Grundherr, director of Benham and Reeves. 

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The term non-dom refers to someone who lives in the U.K. but who has a permanent home, or domicile, overseas. Such individuals only pay U.K. tax on the money they earn in, or transfer to, the U.K., but not on their foreign income, resulting in generous tax breaks. 

In March, Chancellor of the Exchequer Jeremy Hunt announced that the system will be changing. From April 2025, people who move to the U.K. will have to pay tax on the money they earn overseas after four years of residency, and those who currently have nom-dom status will have a two-year transition period. 

“It’s not just the prime sales market that is struggling,” von Grundherr said. “While London overall continues to benefit from extremely high rental demand, appetite for prime rentals has fallen, with inquiries down between 4% to 8% across prime rental thresholds.”