Price sensitivity percolates from prime central London into the top end of Britain’s regional property markets
Nick Maud, Director, Residential Research
Until recently, interest rate cuts and greater stability in the mortgage markets have meant that prices have remained more resilient for prime properties in the regions as opposed to London, driven – as they are – by a more domestic, debt-reliant buyer base. However, the spring and early summer market of 2025 have marked a turning point, with caution emanating from London taking hold in the regions.
Average prime regional property prices were down -1.9% in the second quarter of the year and -2.7% annually. Compare this with almost flat quarterly growth back in March (-0.2%), and one can begin to grasp the extent to which the calculus has shifted.
Ongoing economic uncertainty – some domestic, some arising from global geopolitical volatility – has suppressed price growth across prime London since 2022. This pressure was enhanced by the election of the first Labour government in over 14 years in 2024, followed by an inaugural October Budget that targeted high net worth individuals with a series of tax-related announcements. These included the unwinding of the ‘non-doms’ tax and the increased surcharge on stamp duty for second home purchases.
Now, buyers further afield have become more cautious, with prime properties sitting for longer on the market. The prevailing cautious sentiment has stemmed migration from London into the regions, reducing demand from a key source, particularly at the fringes of the commuter zone.
High-value country houses have been especially sensitive to this shift in sentiment, along with those locations that experienced the strongest price growth in the wake of the pandemic. As a result, country houses are now priced about 6.2% lower than this time last year. Nevertheless, well-presented homes, particularly those located in sought-after private estates, that have also been priced pragmatically, continue to garner interest.
Similarly, average prices for coastal property, which had already softened in the wake of the stamp duty surcharge, continued their downward trajectory, ending at -2.9% on the quarter and -6.7% annually.
Consequently, motivated buyers and those who are willing to take a longer-term view find themselves acquiring property at a significant discount relative to their post-pandemic peak, across a variety of regional submarkets.
There are, however, some pockets of resilience; price movements of prime properties in the Midlands/North of England, Scotland and Wales have proved most robust, continuing a trend of stronger performance that we would expect at this stage in the housing market cycle.
Both supply and demand metrics above £1 million saw more muted annual growth in the second quarter of 2025, compared with the same period in 2024. Growth in net agreed sales, serving as a proxy for demand, cooled from +12% in Q2 2024 to +6% in Q2 2025. This follows a brief rally over the latter two quarters of 2024. New instructions, the corresponding proxy for supply, has seen growth slip from 17% in Q2 2024 to 6% in Q2 2025, continuing a broad downward trajectory over the intervening quarters.
This finely balanced relationship between supply and demand, with muted growth uniting both metrics, has resulted in more changes to the asking price of unsold properties. These increased by +38% on the year in the second quarter of 2025, down only slightly from +42% in Q1.
Concern around economic stability and specifically Labour’s taxation strategy has driven much of this cautious sentiment in the prime markets. As a result, the Autumn Budget is going to be an important landmark in determining the path ahead. Future cuts to interest rates and upward stimulation from loosened lending criteria may serve as a counterbalance, but should also be viewed in the context of ongoing turmoil on the international stage, with particular attention to the trading policy of the United States and the status of a number of territorial conflicts. In such an environment where caution prevails, vendors should remain realistic in their pricing expectations and be alert to buyers who are truly motivated.
< View our latest Q2 2025 updates here.
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