Three things to understand about London property

Ever since Roman times, there has been a settlement in London. Over the centuries it has flourished, but it has also weathered its fair share of crises. But what should the modern buyer be aware of that is peculiar to the capital, or influences its market more than those of other cities?
Published 20 April
6½ mins

When I moved to London in 2010 from Hong Kong, I had a debate with my family about what constitutes ‘London’ as it’s not as simple as it should be. Its underground reaches stations such as Amersham (which is in Buckinghamshire) and it’s also not – as many think –the area within the M25 ring road, given that encircles places such as Caterham (in Surrey, not London) and excludes others which should be counted, including North Ockendon (in the London borough of Havering). And while we all agree it stretches far further than the City of London’s ‘borders’, even a list of London postcodes misses out relevant boroughs (e.g. those of Merton, Redbridge and Richmond-upon-Thames)!

The discussion about where London’s borders start and stop matters given it affects property prices: London’s average home price in January 2022 (according to the Office for National Statistics) was £510,000 versus the average of £274,000 for the UK as a whole.

Other aspects of the London property market set it apart from the rest of the country too. But while most of these wax and wane in importance over time, there are some long-term factors that property purchasers looking in the capital should be aware of. We highlight three here.

1. The focus on prime

When reading about the state of the property market in London, you will often come across the term prime central London (PCL).

This can cause some confusion given there isn’t one single definition for PCL. It’s a term that has evolved based on buyer demand, although it is broadly held to be the area covering the neighbourhoods surrounding Hyde Park, between Fitzrovia in the east to Holland Park in the west. These districts have been (and remain) among the most popular residential areas in the country for centuries and, as a result, provide a benchmark for house price movements given the huge breadth of housing options in London.

The demand for PCL is not just because it’s an area of the capital that is a great example of the international melting pot for different cultures that is London. Its ‘offering’ also benefits from the UK’s robust financial and legal systems and the strict planning permissions that prevent skyscrapers being built in these locations, which allow buyers some surety that their investments are unlikely to be hit by a sudden increase in a new local supply of dwellings. These planning laws have remained constant despite the steady and long-term growth in demand for property in these locations.

But, given the relatively small area this term covers, industry experts have started to label other areas as ‘prime’ to broaden their benchmarks, bringing in locations people would have assumed were in PCL, such as Notting Hill (which isn’t traditionally), and also referencing other quality Zone 2 and 3 areas too, such as St John’s Wood, Hampstead and Highgate.

As such, it is worth looking at your preferred location and understanding whether it is accepted as PCL, or if it is tagged as prime, prime fringe or outer prime London. This expansion of the term prime shouldn’t come as a surprise given London has the greatest concentration of £1 million-plus properties in the UK, where one in 11 homes (a list of 332,495 in total) in the capital is now worth £1 million or more.

It is worth noting that there is also the use of the moniker super prime London, which generally focuses on the price of the properties in scope – although the location will be reflected in the cost – and covers either the £5 million-plus property market (e.g. Savills) or £10 million-plus (e.g. Knight Frank), depending on the data publisher.

2. The impact of first-time buyers

Introduced in 2013, the government’s help to buy scheme sought to help first-time buyers of new builds (only) step onto the property ladder by providing government loans of up to 20% of the purchase price across the country and 40% in London, which are interest free for five years. London also differs from the rest of the country given the maximum value of an eligible property is £600,000 versus £437,600 for the south east, with other regions lower still.

But despite the additional allowances for London, the level of prices would lead you to believe that London isn’t a great place for first-time buyers, particularly given London (although other cities suffer too) isn’t seeing sufficient new housing stock come online.

Despite this, however, although the 2021 figure of 35% of buyers in London being first-timers is relatively high, numbers in 2009 – i.e. during the financial crisis – were not significantly lower at 32%. Why? Most believe it’s down to family support. Savills, for example, has estimated that the Bank of Mum and Dad helped almost half of first-time buyer transactions in the open market through gifts and loans – levels of support that resonate with us given the advice we provide to clients helping out the next generation(s).

And while the closure of the UK help to buy scheme by April 2023 may lead to a rush in applications, the relaxation of the Bank of England’s mortgage affordability test may offset some of the expected pain for first-time buyers.

What’s important to note is that this deadline won’t affect newcomers to UK shores, given all foreign nationals have to have ‘settled status’ or indefinite leave to stay in the UK to be eligible for the scheme, and the first-time buyer rule applies to property ownership anywhere in the world.

3. Sizeable population swings

While any large conurbation sees shifts in population, London experiences the extremes of any movement due to its sheer size. In the 12 months up to Q3 2020, it is estimated that some 700,000 non-UK nationals left the capital – over 50% of the 1.3 million that had left the country as a whole. Many thousands more UK nationals moved back to their home towns or left to change life completely in far flung places from Caithness to Cornwall. London’s Surveyors and Valuers showed that 113,000 homes were purchased outside the capital by Londoners in 2021, the highest number since 2007. This resulted, given the increased demand for a limited supply, in the number of £1 million-plus houses outside London growing by 95,500 in the 18 months prior to June 2021.

The capital also sadly lost some 20,000 people to COVID-19.

Regardless of why and whether some will return or not, the numbers have also historically shown sizeable swings. The 2011 census, for example, highlighted that London saw the fastest surge in population of all UK regions as it counted 850,000 more residents than the 2001 census did. The release of the 2021 census (which is only expected to take place in early summer 2022) may show a sizeable shift again and may even provide a number that negates the decline in numbers due to Brexit and the pandemic.

One final trend that is also worth mentioning is the developing number of off-the-market deals where homes are sold privately. While this has long been an approach to buying for lots of PCL property sales – given the secrecy that it provides for those looking to move away from an area without the speculation of the neighbourhood as to why – many more transactions are now being completed using the secretive approach.

All these trends underscore why many choose to seek support from a private bank for property purchases, rather than other lenders, given that the bespoke support and the understanding they have of their clients’ financial affairs often allows property financing arrangements to be flexible and turned around relatively quickly. In addition, these firms often do not ’follow’ the rest of the market with regard to the risk appetite for lending that headline newsfeeds. They are much more likely to be consistent across the economic cycle.

Last but not least, the relationships private banks have built over time with the right property intermediaries in key markets, such as London, serve clients too, particularly when you find your perfect place and flexibility and speed are of the essence.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how we are helping clients during the current pandemic, or call +44 (0)1624 645000 to speak to our client services team.

If you would like to find out more about how we can help clients borrow against property or investments, please contact us on the same number as above, or complete a form using the links towards the end of the page.

Your home may be at risk if you do not keep up-to-date with your payments on your mortgage or any other loan secured against it.

about the author

Karen Bennett

Karen Bennett

Karen joined Nedbank Private Wealth in 2019 and is based out of the London office. She brings to the table over 23 years’ experience in financial services in Asia, Europe and the UK, primarily in investment and wealth management.


Karen works with the private banking teams to identify trends in wealth management and develop initiatives to help private clients understand the opportunities for their wealth, as well as the hurdles. She also works with the company’s network of finance, fiduciary and advisory professional partners to introduce our services and ensure Nedbank Private Wealth is seen as the provider of choice for high net worth individuals and their advisers.


Outside of work, Karen is on the management board of Women in Banking & Finance UK, an ambassador for Insuring Women's Futures and a member of the board of trustees for International Children's Trust. Karen holds a business degree earned in Germany and the UK.

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