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Richest fare best as interest rates hit house prices elsewhere

The top end of the UK’s residential market is experiencing a growing divergence between heavily mortgaged and equity-rich owners, according to Savills. 

However, the agency insists that buyer and seller expectations are adjusting quickly, with both more realistic about price readjustments after two years of record growth.

Savills says London properties valued below £500,000 have seen prices fall 2.1 per cent over the past three months but are still up 0.3 per cent on the year. Whereas properties valued £2 million and above have recorded a more modest fall of 0.7 per cent on the quarter, and are still up 2.3 per cent up on the past 12 months.


“High value properties continue to outperform across the board as unique quality homes remain sought after by buyers, both domestic and overseas. These markets are driven more by flows of global equity and although not immune, they are dictated less by domestic economic volatility” comments Frances McDonald, research analyst at Savills. 

“The rarefied market of central London’s top postcodes also continues to look good value in historical terms, particularly when seen in the context of the weaker sterling and strong dollar. A price recovery in this market appears long overdue. This will help shield it from more significant price falls, with stronger recovery in prices expected to materialise from 2025.”

She forecasts that less reliance on borrowing will cushion the most expensive London markets from the affordability concerns governing lower value markets. 

Across UK regions, markets furthest from London - where mortgage affordability is least stretched - have been the strongest performers on the quarter and showing the smallest falls, including Scotland (down just 0.7 per cent) and the Midlands and North (down 0.1 per cent).

By contrast, the relocation markets closest to London where between 55 to 67 per cent of prime buyers have a mortgage, are already feeling the pinch of base rate hikes. As such, there has been a more abrupt price adjustment over the quarter, with prime prices falling by an average of 2.0 per cent across the suburbs and inner/outer commuter zones. H

“Economic uncertainty and a tougher lending environment are starting to translate into slower market conditions in those markets which are most exposed to a higher cost of borrowing. However, the amount of quality stock on the market remains limited, with nearly half of Savills agents reporting a decrease in the number of properties on their books over the past three months” according to Andrew Perratt, head of UK residential at Savills.

“This should ensure that the most sought-after properties continue to attract strong interest, cushioning markets from more significant falls. Encouragingly, expectations are also adjusting quickly, especially in London, with almost all buyers and three quarters of sellers expecting to see some reductions in prices. That buyer and seller expectations are moving pretty much in tandem should help keep the market moving.” 

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  • icon

    There will always be those in ''top end properties'' that can't afford them, it's called living beyond your means

  • Fergus Wilson

    PSLs should establish what is their target audience!

    I used to target 2 bed mid terrace through to three bed detached.

    A Pyramid model with the three bed detached on the top. The board base being 2 bed mid terrace/

    The majority of the population live in two bed mid terrace.


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