IT HAS been a bad start to the year for London’s luxury homes.

Prices for properties in prime areas of London, defined as 34 exclusive neighbourhoods including Belgravia, Mayfair and Kensington, were down 7.1 per cent in January compared with a year earlier. That’s the largest decline in almost five years, according to data compiled by researcher LonRes.

Sales, meanwhile, slipped 16 per cent as higher interest rates affected demand and more supply came to the market.

At the top end of the market, mansions are struggling to sell. The number of homes sold for more than £5 million (S$8.5 million) in January was down 17 per cent from last year, according to LonRes.

The wider UK housing market has struggled as high mortgage rates and a cost-of-living crisis hurt purchasing power.

Luxury homes have not been immune, with UK buyers waiting for rate cuts and the results of a general election later this year to make a move.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

Some of the wealthier London residents have even chosen to rent rather than buy this past year.

Prices in prime areas of London overall have roughly been flat the past decade, according to LondRes, a result of the city losing some of its competitiveness as a global finance hub post-Brexit and the pandemic-driven race for space in the suburbs.

As UK buyers pull back, a larger proportion from overseas are filling the ranks. London luxury properties are competing with villas in southern France and penthouses in Dubai and New York, putting downward pressure on prices. BLOOMBERG