What: Prime London home values are on course to halve in real terms from their 2014 peak in early 2027 if prices stay flat, after a decade of stamp duty surcharges, Brexit and wealth taxes.

Why it is important: Prime London values have fallen sharply, yet Selfridges and Harrods both reported improved profits, while London's luxury department stores name fiscal measures such as tax-free shopping and National Insurance costs as their constraint.

Savills' Prime London index is down about 27% from its 2014 peak. Once consumer price inflation is factored in, a Bloomberg News analysis puts the real-terms fall at more than 49%. If values stay flat and inflation continues at its current rate, prices would have halved from the peak in the first few months of next year. Savills does not expect nominal price growth to return until 2028, and its head of residential research, Lucian Cook, says there is probably no stimulus for a recovery, with stamp duty a brake.

The slump dates from changes begun in 2014 that raised transaction taxes on the most expensive homes, followed by surcharges on landlords, second home owners, overseas buyers and company purchasers. Brexit, the pandemic, rising wealth taxes and doubts over London's status as a hub for the super rich added to the pressure. For dollar based buyers the drop is steeper: 40% in nominal terms, or 58% after US inflation. An apartment at Academy Gardens in Kensington recently sold for about £10 million ($13.3 million), roughly half its 2007 marketing level.

IADS Notes: The decline in prime London property values contrasts with the drivers that UK luxury department stores themselves cite for current conditions. Selfridges' operating profit rose 88% to £79.7m, helped by a longer trading period, while its CEO still points to the abolition of tax-free shopping for international visitors as a drag on trading (Retail Week, September 2026). Harrods returned to an £84.9m pre-tax profit, with London's luxury department stores continuing to cite the absence of tax-free shopping and higher National Insurance costs as headwinds (Fashion Network, August 2026). Visitor taxation is tightening elsewhere, with overnight levies spreading across Europe and Asia and falling hardest on the multi-night, high-spending visitors that department stores rely on most (Financial Times, September 2026). Demand among the very wealthy has held up where retailers target it directly: LuxExperience grew fourth-quarter net sales by 7.6% excluding currency on a focus on ultra-wealthy shoppers, with Mytheresa up 39% in the US (Bloomberg, September 2026). The headwinds UK department stores name are fiscal, tax-free shopping and employer National Insurance costs, with no reference to a weakening of client wealth.

Luxury London home values are down by almost half in real terms