London’s market for homes priced above £5 million fell to its lowest level in five years in 2025 as transaction volumes continued to normalise following the pandemic-era surge, according to a new report published on Wednesday by Savills.
However, the figures also show that activity gained momentum in the final weeks of the year, as buyers put Budget uncertainty behind them, creating what experts described to Spear’s as ‘cautious optimism’.
Savills’ analysis of both second-hand and new-build homes shows that 412 properties priced at £5 million or more were sold in 2025, down 11 per cent on the previous year as uncertainty weighed on the market. Sales in the £5 million to £10 million bracket proved the most resilient, falling by just five per cent, while the £10 million to £15 million segment saw the sharpest decline, with transactions down 31 per cent.
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The data also found that numbers improved towards the end of the year, with sales up seven per cent in the final quarter compared with Q3, while the final three months of the year recorded the highest number of £10 million-plus sales.
In total, £4.09 billion was spent on homes priced above £5 million, an 18 per cent annual decline.
That hesitation was driven largely by uncertainty around tax policy and changes to the non-dom regime, as wealthy buyers and sellers held back amid months of speculation ahead of the November Budget, Rosie McCormick Paice, partner and head of residential property at Edwin Coe, told Spear’s.
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During the much-anticipated announcement, Chancellor Rachel Reeves confirmed plans for a ‘mansion tax’ which will levy between £2,500 and £7,500 annually on homes worth more than £2 million from April 2028.
For Ollie Marshall, a director at property buying consultancy Prime Purchase, the announcement was ‘surprisingly benign,’ he told Spear’s, adding that ‘the general consensus’ is that it will not have ‘any significant impact on markets’. However, he noted that while none of the potential tax raids that were feared came to pass, the uncertainty surrounding them did ‘lead to a market hiatus most of the year’.
Since the Budget, fears have eased. Frances McDonald, director of research at Savills, said the outcome was indeed ‘better than many had expected,’ helping to lift activity in the final weeks of the year. That recovery has continued into early 2026 and, she added, reflects ongoing confidence in London’s long-term appeal.
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‘There was a spike in transaction levels and enquiries post budget, essentially a relief rally as the budget failed to deliver on the mansion tax […] which is what many people feared,’ Marshall said, echoing McDonald’s view that ‘this uptick in activity has continued into 2026’.
However, Marshall explained that while prime central London now represents a ‘value play’, UHNWs should ‘be aware of other political risks for 2026’.
These include another Budget later in the year and the possibility of a leadership challenge, both of which could trigger ‘short-term uncertainty,’ he said. Geopolitical tensions in Ukraine, Iran and Greenland could also ‘play into the markets,’ Marshall explained, ‘but could be favourable in terms of diversification as central London could be well positioned as a haven play’.
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McCormick Paice echoed similar views, telling Spear’s that ‘the pickup in activity towards the end of the year is certainly encouraging’.
For her, ‘buyers should be focused on fundamentals such as location, long-term value and liquidity, and be prepared to move decisively when the right opportunity arises’. She also stressed the importance of ‘timing and preparation with finance, structuring and due diligence lined-up in advance’.
‘Looking ahead to 2026, we expect to see cautious optimism,’ the Edwin Coe partner said. McCormick Paice hopes this early momentum will steadily improve as confidence returns, although she noted it is likely to be slow as buyers remain ‘price-sensitive and forensic’.
She added: ‘Our advice is to take a strategic, long-term view, seek specialist advice early, and use the current market conditions to negotiate well rather than waiting for a perfect moment that may never come.’
