It’s been almost three years since Emma first put her Kensington home on the market. With an initial asking price of just over £4m, she turned down a number of early low-ball offers before accepting one only slightly below what she’d wanted. But after months of dithering, the buyer pulled
Felix Armstrong
Thursday 16 April 2026 9:48 am | Updated: Thursday 16 April 2026 10:17 am
It’s been almost three years since Emma first put her Kensington home on the market.
With an initial asking price of just over £4m, she turned down a number of early low-ball offers before accepting one only slightly below what she’d wanted. But after months of dithering, the buyer pulled out at the last minute.
Emma, who spoke to us using a pseudonym because the sale is private, then tried again and put the property back on the market at the beginning of the year.
“The viewings were quite slow, very much dribs and drabs,” she says.
“Then I happened to bump into our previous agent in the street. She said look, I’m going to be honest with you. If you want to sell the house, you’ve got to really move the price.
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“The market’s so bad, if you want this to move, you have to reduce the price.”
After some umming and ahing, Emma capitulated and cut the offer price by more than £500,000, a drop of around an eighth. The property has still not sold, but interest has at least started to pick up since the discount.
“The house has been described as ‘always the bridesmaid and never the bride’, because we’ve had so many near misses,” she says.
“We’ve had quite bad luck in that respect and it can be really soul-destroying. We love the house so much but we are really keen to just get on now.”
Emma’s struggles are far from unique. London’s luxury property market has taken the biggest hit in a decade as transactions and values fall.
Biggest drop in luxury house sales
The number of sales of prime properties in the capital fell by 37 per cent year-on-year – the biggest drop since 2015 – a City AM investigation has revealed.
The collapse of Harrods’ luxury property arm last week dragged London’s prime property market to a new low, as experts say taxes, poor-quality supply and the flight of non-doms are combining to batter the capital’s desirability for the world’s elite.
Using Land Registry data, City AM has analysed more than 1,000 transactions from the past decade, spanning more than 100 of the capital’s most-sought after residential streets.
While London’s prime property market reached a high point in 2021, with 156 sales across the streets surveyed, activity plummeted to only 84 transactions last year, the lowest since 2017.
This marks the biggest decline in activity in the capital’s luxury house market in a decade, nearly triple the size of the next-largest decline (13 per cent) coming in 2016.
The value of these transactions has stagnated. The best year for sale values came in 2016, when the average price of the sales analysed by City AM stood at £9.4m.
The average price of transactions last year edged up slightly from the year before – up from £8.6m to £8.7m – but stayed far below the rate of inflation, which by now should have put the average transaction at over £10m.
Stuart Bailey, head of prime central London sales at property experts Knight Frank, told City AM the luxury property market is suffering from a huge decline in top-quality stock.
“If it’s not the best of the best, or it needs work, or it needs doing up a bit its [value is] going to get knocked so that type of property that it’s in the middle is in no man’s land,” Bailey said.
While the best quality prime homes are still being sold for huge sums, “it’s the medium stuff that’s dragging the market down,” he said.
Mid-tier stock builds up and slows market
Following the collapse of shadow lender MFS, the London market is set to be flooded with hundreds of luxury properties in prime locations like Kensington and Mayfair.
Read more House prices rise as property market builds momentum
But prime property experts told City AM last month that these properties – unless they are of top quality – could “add to the pile” of undesirable stock and further slow the market.
The market’s “flight to quality,” Bailey said, has been caused by “negativity around successive governments’ approaches to self-generated and entrepreneurial wealth”.
While some buyers are opting to move to different markets to find better-quality prime stock, potential sellers can afford to rent out their homes while they wait for more favourable selling conditions.
City AM’s analysis revealed that a number of prime properties were sold for discounts last year, suggesting that some sellers are opting to take losses rather than keep their houses on the market for longer.
One house on Princess Road, Camden, sold for £3.5m last year having been bought for £3.4m in 2019, marking only a £100k profit over six years, meaning the seller made a significant loss if adjusting for inflation.
Tor Gardens, in leafy Kensington and Chelsea, features a house which was bought for £17.5m in 2021 and sold for the same amount early last year, again marking a significant inflation-adjusted loss.
The trend of transactions throughout 2025 reveals a stark drop off towards the end of the year, when sales stalled from a May peak to reach zero in December.
Months of speculation around the November Budget last year had a devastating effect on the UK’s property market, as sellers and buyers were spooked out of transactions by rumours of radical reforms to property tax.
The intense speculation weighed particularly heavily on London’s property market, with house prices in the capital falling by two per cent year-on-year in December.
Budget speculation slowed sales
City AM’s findings indicate that transactions slowed well in advance of the Budget, falling by more than half between July and August, before failing to recover for the rest of the year.
Sean Williams, associate director of Hamptons estate agents’ Pimlico branch, told City AM London’s prime property market has faced growing pressures since 2015.
Reacting to City AM’s findings he said: “Brexit triggered a significant withdrawal of European buyers from the capital, and subsequent shocks – including the pandemic, rising inflation and the sharp increase in interest rates from 2022 onwards — have further weighed on confidence.”
Property experts have also pointed to the end of the non-dom tax regime as a factor in the falling demand for luxury housing in London.
The non-dom tax status had allowed UK residents whose primary home was outside of the country to only pay tax on money made within the UK, but was scrapped at the 2024 Budget.
Last week, estate agents at upmarket property advisors Property Vision told City AM the end to the tax regime likely played a “major part” in the collapse of Harrods Estates, the property arm of London’s best-known department store.
Knight Frank has observed a surge in Middle Eastern expats seeking prime rental properties in London since the Iran war broke out, but most of these leases are six months or shorter – meaning a lasting boost to the residential market is unlikely to materialise.
For her part, Emma has decided she’ll be moving out of London as soon as her home is eventually sold.
“I think London is going through a very depressed stage,” she says.
“Everything has become cripplingly expensive. The whole economic face of London is changing.
“I’ll be able to buy something beautiful [outside London] and I’m ready for a new start.”
Read more Non-dom reforms blamed for collapse of Harrods luxury property arm
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