Luxury home prices in the U.K. have held firmer since November, when the announced “mansion tax” was less severe than many high-end homeowners had feared, according to a report from Savills on Monday.
As a result, in prime central London, home prices fell 0.9% during the fourth quarter—an improvement from the third quarter’s 1.8% drop. Meanwhile, prices in Britain’s luxury markets outside of central London decreased just 0.2%, improving from the 0.7% drop in the prior quarter.
Still, prices in prime central London are 24.5% below their peak, with properties losing a quarter of their value since 2014.
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“Agents, particularly in outer prime London neighborhoods, are reporting a pickup in viewings and exchanges since the budget announcement,” Frances McDonald, director of research at Savills, said in the report. “But despite tax changes being ‘better than feared,’ demand remains thin on the ground in more rarefied prime central London postcodes, with the pool of buyers already much shallower since the end of the non-dom regime.”
At the end of November, Chancellor of the Exchequer Rachel Reeves announced that starting in April 2028, a new annual surcharge on properties valued at over £2 million (US$2.64 million) will be introduced. These high-end homeowners can expect a flat yearly fee ranging from £2,500 to £7,500.
This year’s best-performing luxury market across the U.K. was Scotland, the only market where properties have steadily maintained their value. Edinburgh was a large factor, with 2.1% annual price growth, making it the U.K.’s strongest regional market of the year.
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“Despite its stronger performance, buyers of prime properties are likely to remain cautious until after the Scotland budget in January with speculation that the government will follow suit with additional taxes on more expensive properties,” Faisal Choudhry, director of residential research at Savills, said in the report. “Prices across prime Scotland have held steady in 2025, but the prime Edinburgh market has outperformed mainly due to constrained supply and a reduction in the level of available stock.”
The U.K.’s country-house market saw some of the largest price drops this year, and the final quarter showed that it appears to be bottoming out—prices fell by 0.6% during the last three months of the year, a notable improvement from the price drops of the second and third quarters, when values were down 4.2% and 2.8%, respectively.
“The country-house market has seen some of the most improved activity post-budget after a very subdued year,” McDonald said. “In 2026, we expect seasonal patterns to dictate activity less than they usually would, and the market is unlikely to wait until spring to pick back up.”