Prices have fallen by a fifth over the last decade in Prime Central London (PCL), dramatically shrinking the premium paid for properties in those areas and encouraging more buyers to re-examine the benefits of living there, says Stuart Bailey (pictured), Head of PCL sales at Knight Frank.

The 20% fall, he says, is largely the result of rising transaction costs. In contrast, prices in the surrounding areas (prime outer London) are down by just 6%.

In Chelsea, for example, since 2015, the median sold price has fallen from £1,359 per square foot to £1,182 per square foot in 2025 (Q2).

Shrinking premium

The scale of the price falls means the premium paid to move to more central locations has shrunk markedly. A decade ago, buyers paid 75% more to live in Belgravia than in Richmond. That gap has since narrowed to just 29%.

Buyers also now pay a 21% premium to live in Chelsea over Fulham, compared to 47% a decade ago. Similarly, the premium to live in Bayswater rather than Islington has fallen from 34% to 22%.

Perhaps counterintuitively, and despite mortgage rates being higher than 10 years ago, there is now affordability in the market.”

Bailey says: “Perhaps counterintuitively, and despite mortgage rates being higher than 10 years ago, there is now affordability in the market.

“While we may not see the same level of growth as during the last cycle in PCL, many homes are now within reach. If a buyer is looking to enjoy the lifestyle attractions of being more centrally located, the value in the current market can provide that opportunity.”

According to Bailey, the improvements in affordability are starting to ‘pique buyer interest’. The number of offers made in prime central London in the three months to August was 9% higher than the five-year average, whereas prime outer London saw a 6% fall.

And he is expecting the price gap between prime central London and prime outer London to narrow further in the short term.