Market activity normalises after March stamp duty-fuelled spike
Housing activity in prime areas of London fell in April, following a surge in transactions the previous month driven by buyers seeking to beat a stamp duty rise, according to new figures from property data firm LonRes.
Sales volumes declined 26.2% compared to April 2024 and were 22.9% below the average for the same month during the 2017–2019 period. Achieved prices were also down, falling 2.9% annually and sitting 1.3% below pre-pandemic levels.
Despite the fall in sales, the number of new listings rose 8.1% from last year and stood 29.2% higher than the pre-COVID average for April. Stock levels continued to rise, with 11.2% more homes available than in April 2024 and 45% more than five years ago.
According to LonRes, price cuts were also on the rise, with reductions up 36.4% year-over-year in April. Buyers, faced with more choice and high borrowing costs, have been taking a more cautious approach.
Nick Gregori (pictured), head of research at LonRes, pointed out that the earlier surge in March was largely an anomaly. “Our previous update noted that a single good month was not sufficient to signal a recovery, and April’s sales figures do seem to suggest that the strong numbers we saw in March were a one-off, driven largely by the end of the stamp duty holiday,” he said.
Figures from HM Revenue & Customs (HMRC) confirmed a spike in property transactions across the UK in March, driven by buyers racing to beat the April stamp duty changes. This surge front-loaded activity and contributed to a quieter April.
Combined figures show stable market activity
Looking at March and April together, sales were up 5.7% over the same two months in 2024 and 8.9% above the 2017–2019 average. Properties going under offer — often seen as an early sign of buyer interest — fell slightly from last year but were still 14.1% higher than their pre-pandemic average.
New instructions outpaced demand, rising 11.8% over the past two months on an annual basis and 29.9% compared to the pre-2020 average. However, this increase has not yet translated into a significant rise in completed sales.
Price reductions continued to affect the market, rising 54.1% year-over-year across March and April. Discounts on asking prices also grew, with homes in prime London selling at an average 8.9% below initial listing values.
“New instructions in April were higher than last year, but the pace of growth was slower than in Q1,” Gregori said. “Stock on the market across prime London overall is rising, but with prices moving so slowly buyers can afford to be picky.”
Super-prime segment holds steady
In the £5 million-plus bracket, activity was flat year-on-year in April, although it remained 34.5% above the 2017–2019 average. New listings in this price range rose 4.2%, while the total number of high-end homes for sale climbed 23% over the past year and now sits 69% above pre-pandemic levels.
“The stamp duty change had less of an impact on the most expensive homes which meant the £5 million-plus market saw neither the March spike nor the April fall,” Gregori explained. “The stock of available homes continued to grow, but serious buyers are still out there, evidenced by several £20 million-plus deals exchanging in April.”
Lettings market faces supply constraints
Rental demand remained strong, but the lettings market showed signs of strain in April. Lettings agreed dropped 34.8% year-over-year, and new instructions were down 21.5%. Overall rental stock fell 8.4% annually, driven mainly by lower availability at more affordable price points.
Despite these conditions, rents continued to rise. Annual rental growth in April reached 5.1%, putting average rents 33.9% above the 2017–2019 norm.
“The prime London lettings market remained subdued in April, continuing the trends seen over a number of months,” Gregori said. “Numbers of new instructions and agreed lets show little sign of significant recovery in markets under £2,000 per week, but there is more activity at higher price points, where supply is less constrained.”
At the lower end of the market, rental supply is well below historical norms. Homes priced under £750 per week were down 9% year-over-year and over 70% below where they stood five years ago. In contrast, homes priced above £2,000 per week saw a more modest drop of 5% from last year, with supply still exceeding pre-pandemic levels.
Outlook tied to economic shifts
While average home values across prime London have remained flat for much of the past decade, interest rates may become a key driver of change in the months ahead. The Bank of England cut its base rate by 25 basis points earlier this month and signalled more cuts may follow this year.
“The global economic outlook has settled somewhat,” Gregori said. “This will reduce borrowing costs for prospective buyers but also risks causing some to wait for more favourable rates in future.”
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