UK Prime Property Market Bouncing Back

It’s been a year of ups and downs for the UK’s prime property market, according to Barclays Private Bank. While the broader housing market is starting to bounce back, Prime Central London has faced its own distinct set of challenges. But there are several reasons why interest is picking up at the top end of the market.

Property remains a ‘safe harbour’

Amid the recent stock market volatility, property continues to stand out as a tangible, reassuring asset. While investment portfolios can be hit hard during periods of turbulence, prime property – especially in London – offers both stability and functionality.

You can live in it, after all. Moreover, the value of real estate tends to remain resilient over the long term, particularly in prime central London, where the appeal of its location and the enduring demand for high-quality properties continue to make it an attractive option.

In times of uncertainty, this stability makes property an appealing choice for those looking to protect their wealth and secure a more predictable investment.

Falling interest rates

With fixed mortgage rates starting to drop – with some mass-market retail rates dipping below 4% – expectations of further Bank of England cuts could fuel activity. While these rates remain more the exception than the norm, for now at least, they can also serve as an early indicator for where mortgage rates may be heading. A 3.75% ‘all-in’ borrowing rate might be the psychological tipping point for high-net-worth borrowers to return to leverage. And as this threshold nears, there is potential for a surge in demand as borrowers look to capitalise on more favourable lending conditions while they last.

There’s still a lot of untapped borrowing power in the market. We estimate around £2bn of potential lending tied to high-value transactions – mainly homes priced over £5mn – where buyers could be open to borrowing but haven’t yet done so, often due to the higher interest rate environment we’ve seen in recent years. If rates fall to more appealing levels, that could unlock a wave of refinancing and renewed demand from buyers who’ve been sitting on the sidelines – building on the activity we’re already seeing from high-net-worth borrowers who have started returning to the market.

Global buyers still drawn to UK

Despite global uncertainty and soft sentiment data, international demand remains strong. Buyers from the US, Middle East, Latin America and China are all actively looking at the UK, encouraged by local challenges at home and favourable currency dynamics – particularly in London.
It’s also because London’s status as a global capital remains undimmed – its connectivity, culture, education and diversity continue to make it a magnet for international investors.

Prime and super-prime London properties continue to be seen as a key asset class for global investors. Market activity has been notably higher, with more buyers looking for the right property and an increase in interest from those seeking to diversify or create liquidity through luxury assets selling.