“With the Bank of England’s rate hiking cycle likely to now be at its peak, many economists now expect the pound to weaken further in the final few months of 2023, which could precipitate another influx of buyers with holdings in foreign currencies into the PCL space."
Some caution required
However, it is not all roses in London's prime property gardens.
McDonald explains there are some headwinds, which have led to a "sense of caution" at the top end of the central London market.
She cites a lack of urgency among international buyers, despite the value on offer in a historical context.
Sterling’s appreciation, particularly against the US dollar, macroeconomic pressures on global wealth and requirements for transparency around beneficial ownership have contributed to this.
McDonald adds: "For a global perspective, some reversal of the substantial wealth gains of the past few years are likely to take place as some countries face slower growth and even recession."
This is why Mike Cook, chief mortgage officer at Market Financial Solutions, says it is important for buyers to stick to quality.
He explains: “The case for sticking to quality when investing in the UK property market is compelling.
"If we look at the areas that have appreciated and held value the most historically, they tend to boast high-quality period and luxury properties that will always be desirable among buyers – particularly in the upper echelons of the market.
"Therefore, as these properties tend to weather market fluctuations better, investing in quality could be a good way of safeguarding an investment in the long run.”
He says the UK could start to see a broadening of scope among overseas property buyers, looking to invest in quality homes outside of the typical PCL areas.
Cook explains: “Obviously, due to their desirability among buyers and perennial lack of supply, the main PCL areas, such as the City of Westminster or Kensington and Chelsea, tend to weather the storm of falling prices better than most.
“However, areas like Battersea, Shoreditch, and Clapham – not traditionally PCL areas – have shown similar robustness in recent years, particularly as demand for homes in these neighbourhoods has grown among younger buyers and renters."
For example, data from property buying platform Rightmove shows while the average house price in Clapham softened slightly this year, it remains at £868,601 - far above the national average of £288,000, according to the Office for National Statistics.
Meanwhile, despite prices falling by 13.4 per cent in real terms across the UK, London estate agency Kinleigh Folkard and Hayward's data shows that prices in Shoreditch have fallen by just 1.6 per cent on the previous year.
