London property: expect further price falls

The gap between London property sellers’ hope and reality is widening, says Merryn Somerset Webb, as property sellers wake up to a market slowdown.


The gap between asking prices and selling prices in Knightsbridge is £170,000
(Image credit: 2011 Bloomberg)

It is with a small sense of relief that I offer you this link to It tells the story of the central London property market in 2016 a story of fast falling prices that we have been predicting for a little too long.

According to data consultancy Lonres, the average gap between hope and reality (asking price and selling price) on a prime central London house today is over £100,000. Look to Mayfair, Kensington and Knightsbridge and that number rises to £170,000. And for some it's rather worse than that: Jamie Oliver has reduced the price of his house in Primrose Hill by £2m to a mere £10m.

Overall, Savills expects prices to fall around 9% in London this year (after falls of 0.4% in 2104 and 3.3% last year). So what's going on? All the things we have been talking about.

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The change in the buy-to-let tax rules is putting off investors who would be buying with a mortgage. The whopping stamp duty bills on high-priced property means that no one buys unless they are sure they are settling in for the long term. Note that Oliver's house at £10m would still stick the buyer with a £1.1m stamp duty bill: even in Knightsbridge that's going to pay your rent for a while.

The prices themselves were getting just too high (however cheap money gets, there is still a price at which the number of real buyers is too low to absorb all the stock above a certain price level). The rise in luxury new-build supply across London means that buyers have enough choice that they might as well bargain as they clearly are.

And finally there is Brexit and the uncertainty that brings to financial folk. It's a perfect storm for London sellers. It also isn't anywhere near over yet: there are currently 14,031 £1m-plus houses for sale in London, says buying agent Henry Pryor. Last month 297 sold. That's quite a supply overhang: expect further price falls.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.