Falling prime central London house prices eased to a 0.2% fall, while prime outer London slipped by 0.3% during the final quarter of last year, due to slowing inflation and lower mortgage rates.  

Over 2023, prices in prime central London fell by 0.8% and by 1.2% in prime outer London, data from estate agent Savills shows.  

Savills director of residential research Frances McDonald says: “These figures point to a market that is past ‘peak pain’ as price falls continue to ease.   

“But despite this increased optimism, with the majority of Savills London agents [79%] expecting to see stock increase in the next three months, realistic pricing among sellers will remain crucial in the coming months.”  

The survey comes after the base rate was held at a 15-year high of 5.25% in November for the third time in a row as the Bank of England bids to bring inflation back under its 2% target, currently at 4%.   

This has allowed lenders to cut mortgage rates across all price bands as they fight for market share.  

McDonald adds: “During 2023 there has been a growing divergence in performance across different price points.   

“Generally, lower value properties which are more dependent on demand from those using mortgage debt, such as first-time buyers and investors, have fallen most significantly.   

The agent points out that in outer prime London, properties worth less than £1m fell by between 1.8% and 2.3% while those worth more than this have held steady, declining by just 0.5% in 2023.  

It adds that higher-value homes across North and East London, in particular Hackney, Islington, Shoreditch and Victoria Park, recorded annual price growth as a result of a continued imbalance between the supply and demand of larger family homes in these areas.   

McDonald says: “The more discretionary nature of the very top end of the market in central London means the value of property worth more than £10m is down by 1.3% on average but this has supported greater levels of activity at this price point.”  

Prime properties across the rest of the UK fell by 0.8% in the final quarter of the year, and by 4.8% in 2023.  

The agent says that “after a year of uncertainty, buyer and seller confidence started to return in the final quarter of 2023,” again due to easing inflation and lower mortgage rates.  

Savills UK residential research analyst Katrina Fyfe adds: “More mortgage-dependent markets such as the suburbs and inner commuter areas had the biggest easing in price falls over the last three months of the year.   

“Values fell by 0.5% and 0.6%, respectively, following significant falls in the third quarter.   

“The markets in Scotland, however, saw their greatest price fall in the fourth quarter following a more resilient performance during the past year.”  

The firm also points out that key regional cities, including, Bath, Bristol, Cambridge, Glasgow, Oxford and York, outperformed their surrounding village and rural areas during 2023.

City properties in Cambridge, for example, fell by 1.3% during 2023, while those in surrounding areas fell by 5.1%.