The widening price decoupling between Prime Central London (PCL) and family-led outer boroughs signals an operational pivot: capital is shifting from tax-exposed wealth preservation to domestic utility.
London is making it increasingly difficult to justify buying property there, with Chris Rokos the latest billionaire (with a ‘b’) to move his tax residency out of the UK.
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Against a backdrop of higher government borrowing costs – with 30-year gilts sold at a yield of 5.82%, a multi-decade high – rising mortgage rates and continuing political instability, it is easy to understand why.
This usually produces an environment where transactions stall and prime prices weaken further, as buyers submit lower offers and sellers refuse to accept them.
Yet new research from Knight Frank shows something interesting: PCL sales during the three months to August were actually 6% higher than during the same period in 2025.
So, why is this happening? Stuart Bailey, Head of Prime Central London Sales at Knight Frank, argues that buyers are using these conditions to negotiate a better price.
But please don’t call it a comeback. Data from LonRes shows that achieved prices were down almost 8% annually, with transactions down 11.5% as recently as July.
Uncertainty may no longer be stopping every deal. Instead, it is increasingly affecting the price at which those deals happen, as correctly priced properties continue to move and sellers accept the new reality.
It should be asked whether a property’s discount reflects the wider switch to a buyer’s market, or whether that particular property will remain difficult to sell even after market conditions improve.
Prime discounts unlock demand
Prime London transaction volumes were up 17% year-on-year in Q2 and almost 48% compared with Q1. This according to the Coutts London Prime Property Index Q2 2026.
As ever, the devil is in the detail:
- 10.3% was the average discount achieved during Q2.
- A whopping 83% of transactions completed below their original asking price.
- At £10 million-plus, average discounts reached more than 16%.
Despite transactions increasing, buyers are not rushing to meet the valuations sellers expect. That time has now gone.
July’s slowdown showed what happens when price expectations do not meet, with hopes of a wider recovery firmly put on pause.
Pricing power is no longer automatically in the seller’s hands. Demand remains, but sellers are having to hand some of that power to buyers to get deals done.
Buyers are very much still in the market, but they have come prepared – and brought a devastating combination of expectations… and calculators.
That creates opportunity, but the size of the discount alone cannot tell investors whether they have found value or simply inherited somebody else’s difficult property.
Buyers renting their time
As we know, UHNWIs are more mobile than ever and have the power to walk away from a less-than-favourable deal.
Rental growth at the top end of central London was up 1.5% annually, according to Savills’ July residential research.
As well as having the ability to move around the globe, buyers can remain in London by renting when they cannot secure the right purchase price. Some prospective buyers are now expected to rent for another 12–24 months, according to Knight Frank.
With the risk and commitment of ownership reduced, it could be argued that these buyers are simply buying time until their estimation of a fair price is met by the seller.
As prices continue to fall, it is becoming clear that demand to live in London remains stronger than demand to own London property, at least at today’s prices.
Unless a property has a genuine USP, a compelling price is the only other way to get it moving in a market where buyers are willing to bide their time.
The problem for investors? A large discount does not automatically make a property unique – or even good value.
Usable prime
An interesting trend emerged in the Coutts research, with annual prices rising across several family-led markets outside PCL:
- Fulham and Earl’s Court: +5.2%
- Hampstead and Highgate: +2.8%
- Battersea, Clapham and Wandsworth: +1.2%
Higher levels of negotiation were recorded in more internationally dependent markets such as Knightsbridge, Belgravia, Mayfair and St James’s.
Tom Bill’s Knight Frank research reflects this difference in the properties buyers are prioritising. Prime outer London transactions were 10% above their five-year average, while prime central London remained 8% below.
This suggests a shift towards owner-occupier purchases, where value is also derived from space, schools and long-term use, rather than the property acting primarily as a store of wealth or investment.
As buyers’ demands change, even an attractive discount in PCL may not represent the best opportunity.
What’s reflected in the value?
London is not one big bargain. It is important to distinguish between a distressed sale involving a property with solid bones and a property that is discounted because it has ongoing issues.
Before jumping into a market that looks too good to be true – because sometimes it is – investors should ask whether the property’s value is protected by something genuinely difficult to replicate: exceptional design, views, land, privacy or location.
They must also account for the cost and time required to correct whatever the discount is hiding.
The goal should not be to find the biggest reduction. It should be to find a quality prime property whose owner genuinely needs to sell. And the real opportunity is not buying London at a discount but buying a property the next buyer will not need a discount to want.
Don’t get seduced by massive price markdowns in Knightsbridge or Mayfair, which often just cover up structural flaws or heavy non-dom capital flight.
The real play right now is double-sided: target resilient, end-user markets like Fulham or Highgate where local demand underpins value, or hold out for exceptional, irreplaceable central assets where a motivated seller is ready to deal – ensuring you buy a property the next owner will actually want without needing a discount of their own.
