​​​​​​​Prime London sales market weakens further in July

The prime London sales market continued to weaken in July, with transaction volumes and average achieved prices falling below both year-ago levels and pre-pandemic benchmarks, according to new figures from property data network LonRes.

Transactions in July were 11.5% lower than in the same month last year and 7.3% below the 2017–2019 pre-pandemic July average. Properties going under offer fell 14.8% on an annual basis, though they remained 35.0% above the 2017–2019 average — a more representative benchmark given that July 2025 saw unusually elevated under-offer levels. However, the proportion of agreed deals progressing to exchange remained significantly below historical norms.

Supply edged higher, with new sales instructions rising 3.3% year-on-year and 26.2% above the 2017–2019 July average. Total stock at the end of July was 2.5% higher than a year earlier, though 1.6% below the peak recorded in September 2025.

Price reductions grew by 0.3% on an annual basis — a marginal increase, but one that extended a record in which every month of 2026 has seen more reductions than in any prior year for that month.

The volume of reductions continued to weigh on sale prices. The average achieved price across prime London fell 7.9% year-on-year in July, leaving values 5.7% below their 2017–2019 average. More than half of all properties sold in July had undergone at least one asking price reduction, and the average discount across prime London stood at 10.4%.

Time on the market had a material influence on the size of discount required. For 2026 to date, homes selling within three months achieved an average discount of 3.9%, compared with 19.3% for those taking more than 12 months — a gap of 15.5 percentage points. In 2022, a stronger period for the market, the equivalent gap was 10.5 percentage points, illustrating the heightened cost of overvaluation in softer conditions.

"July typically signals the start of a summer slowdown for the prime London sales market, but July 2026 saw low activity even for the time of year," said Nick Gregori (pictured right), head of research at LonRes.

"Adding a new Prime Minister and continuing global uncertainty to the mix has resulted in a subdued prime London market. This is a case of the data finally catching up with agent sentiment, as their feedback has been more negative than some market metrics would suggest for a number of months.

"The key indicator is simply the number of transactions relative to new instructions, under offers and existing stock – it remains stubbornly low. Uncertainty and a lack of urgency, driven in part by low expectations of future price growth, continue to hinder any potential recovery. The much-awaited interest rate cuts also seem further away given Bank of England concerns around persistent higher inflation."

Super-prime segment particularly subdued

At the £5 million-and-above end of the market, new instructions fell 30.3% in July compared with the same month last year, though they remained 30.1% above the 2017–2019 July average. Transactions declined 20% on an annual basis but were 20% above the 2017–2019 average. Under-offer numbers were down 50.0% year-on-year in July, having slipped over recent months after a more active start to the year. Price reductions in the segment fell 30.6% compared with July 2025.

At the end of July, the number of £5 million-plus properties on the market was 5.2% lower than a year earlier but 61.8% higher than five years ago. By area, supply growth over five years ranged from 17% in Mayfair and St James's to 79% in Kensington, Notting Hill and Holland Park, though the latter figure has declined from a peak of 108% in October 2025.

"At the top end of the market, fewer people need to buy or sell so the issues are amplified," Gregori said. "Last year, we saw a prolonged slowdown as pre-Budget tax speculation started in the summer and carried on all the way to the end of the year.

"This year, new PM Andy Burnham has attempted to quash speculation around property tax reforms, but it may not be enough to boost sentiment in the super prime market."

Lettings market records 18-month high in rental growth

The prime London lettings market saw stronger conditions in July. Lets agreed rose 1.5% year-on-year and new instructions increased 3.6%, with available rental stock 6.8% higher than a year earlier.

Average rental values rose 5.3% annually in July — the highest rate since February 2025 — and stood 41% above their 2017–2019 average. All three main catchment areas recorded comparable annual growth, though prime central London showed the sharpest turnaround, moving from a 3.7% fall in February to a 5.7% rise in July.

LonRes noted the possibility that the Renters' Rights Act, which came into force in May, had contributed to higher rental growth through tighter supply and higher asking rents following the ban on bidding wars. However, the strongest gains were recorded in prime central London, where more than 20% of properties in 2026 carry annual rents exceeding £100,000 and are therefore exempt from the Act, suggesting that other factors may also be at play.

"In the prime London lettings market, there is a growing weight of evidence that the Renters' Rights Act has put upward pressure on rents," Gregori said. "Last month, we noted that two months wasn't enough of a trend and, while three might not be either, there was a marked acceleration in rental growth in July so it's becoming harder to ignore the argument.

"However, the strong performance of the PCL market, where a significant minority of properties are excluded from the Act due to annual rents of over £100,000 per year, raises questions about what other factors are in play. It is possible there is some impact from Middle East expat returnees, plus people choosing to rent not buy due to lack of confidence in the sales market."

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