London property market stalls as Budget jitters keep buyers on the sidelines

London’s housing market remains in stall mode, with prices barely rising year over year and the capital’s growth rate the slowest in the country. Official data show London house prices up about 0.7% over the past 12 months, making the capital the worst performing area in the UK. Across many boroughs, prices are slipping as desperate sellers slash asking prices and buyers stay on the sidelines.

The mood has been sharpened by Budget jitters as Chancellor Rachel Reeves weighs a new approach to property taxes that could include scrapping stamp duty and introducing an annual levy on homes worth more than £500,000. The prospect of such changes has kept buyers waiting to see which measures, if any, will be enacted in the autumn Budget. Notably, a Notting Hill flat in Ladbroke Grove was listed in April 2025 at £875,000 but was cut to £450,000 by July — an illustration of how quickly values can recalibrate when policy overhangs compound affordability concerns. The broader market has also felt the pressure of potential changes to capital gains tax relief on pricier properties, which could alter the economics of selling for investors and owners alike.

Buyers have been sitting tight in expectation of policy clarity. Polly Ogden Duffy, managing director of John D. Wood, says there are vast amounts on the market, and that the time from offer to completion is the longest she has seen in 22 years in the business. She notes that the market above £1.5 million has been particularly affected, with buyers offering far less than asking prices in many cases. The sense of a pause is echoed by market data and sentiment from agents and researchers who track prime areas more closely than the broader market.

Entrenched problems have long weighed on the London market, and the Budget outlook has intensified those pressures. The abolition of the non-dom tax regime has led many wealthy residents to decamp to more tax-friendly jurisdictions such as Dubai, reducing the pool of international buyers. Polly Ogden Duffy says the market has a glut of stock, with listings devalued in the past eight weeks and the time between offer and completion the longest she has seen in her 22-year career. In addition, property prices in the capital have become increasingly unaffordable relative to income, narrowing the field of potential buyers. Richard Donnell, executive director at Zoopla, notes that London’s market has underperformed the rest of the UK for almost a decade, with higher mortgage costs since 2022 tightening affordability. He adds that inner London prices have been broadly flat as activity remains more dependent on international buyers.

HEFTY PRICE DROPS

Across the top end of the market, the mood is especially dire. In prime central London, values are well off their 2014 peaks, with Savills reporting a 22% drop from that level. The average price of a flat in prime central London this year so far stands at about £1,887,488, down from £2,141,936 in the prior year, LonRes data show—the lowest since LonRes began tracking in 2013. Transaction levels are down about 10% year over year, and the time on market from launch to exchange has stretched to a record 324 days. Of 102 properties for sale priced between £3 million and £8 million, 55 have been reduced, and only eight are under offer, all at prices below asking.

Charles Curran, managing director of Kensington and Chelsea estate agent Maskells, says the “usual buyers” are simply not coming or are leaving. He argues inheritance tax on global assets was a major blow to the market, moving wealth toward other jurisdictions. Peter, a retired financier trying to sell a two-bedroom flat in south-west London for more than a year, illustrates the pressure: listed at £1,495,000 and later reduced to £1,395,000, he has seen little interest, and he remains cautious about cutting prices too far.

Greenwich, a leafy south-eastern pocket, has exemplified the price pressure, with a four-bedroom townhouse dropping from £1.4 million to £900,000—a 35% reduction from earlier asks. The owner, who can wait out the market because the property is unmortgaged, reflects the broader dynamics of a scene in which many sellers are choosing to sit tight rather than chase lower bids. Overseas buyers are scarce, and buyers who remain are often flexible about timing and can consider rental yields as a short- to medium-term positioning strategy. A buying agency veteran notes that some French and American buyers remain in the mix, but their numbers are small compared with pre-pandemic levels.

A BUYER’S MARKET

Despite the gloom, there are pockets where properties move if priced well. Data from PropCast show the hottest postcodes in London include SE2 (Abbey Wood/Thamesmead), E18 (Woodford), E10 (Leyton), SE9 (Eltham) and E17 (Walthamstow), where roughly 57–60% of homes are under offer. In contrast, the coldest zones—EC2 (City/Hackney/Shoreditch), W1 (Mayfair/Marylebone), WC2 (West End), W2 (Paddington/Bayswater) and SW10 (Chelsea)—show only about 8–13% of homes under offer. Zoopla’s Donnell notes that London’s underperformance relative to the rest of the UK has persisted for years, and the current scene reflects a tug-of-war between buyers who are cautious and sellers who are willing to test lower price points in select areas.

Ben, selling a four-bedroom house in Brixton, epitomizes the current mood: after putting the price at £1.1 million in May, he cut to £1 million in April and has seen almost no viable offers since. He says the market has turned into a waiting game, with many buyers showing interest but then pulling out as chains break or surveys raise new concerns. The result is a surge in negotiation leverage for buyers and a corresponding drift in sale prices as vendors recognize the need to be realistic about pricing in a slower market. In blocks, growing service charges can also deter buyers, leading some vendors to pivot toward the rental market instead of a sale.

In Mayfair, a contrasting image of the market emerges. A luxury three-bedroom apartment there was listed in December 2024 at £7.95 million and has since fallen by about 18% to £6.5 million. Buyers have remained hesitant, with a recent case illustrating how quickly the economics of stamp duty can recalibrate purchase decisions. A buyer who had progressed to survey and solicitor stages ultimately walked away after realizing the stamp duty burden would be prohibitive in the current climate. Yet in nearby wards such as Earlsfield in south-west London, Savills notes that a five-bedroom house priced at £1 million drew 50 viewings and 19 offers before selling for just over £1.1 million, underscoring that aggressive pricing can still spark bidding wars in the right pockets.

Across London, signs of life persist in specific corridors. Savills points to middle-income, family-oriented suburbs like Putney, Wimbledon and Brook Green as outperformers, with modest price gains over the past year. In Earlsfield, a property that originally attracted multiple bids eventually sold for above £1 million after a more aggressive negotiation by a different agent. The experience of Poppy, a lawyer who moved to a larger home in Wandsworth, underscores the tension between price discipline and seller expectations; after switching agents and lowering her asking price to £1.75 million, she received several offers and accepted £1.77 million, but later expressed concern about the broader market’s sensitivity to fiscal policy shifts in the Budget.

Renters remain a bright spot in many parts of London. Rightmove’s Rental Trends Tracker shows the average London rent at about £2,712 per month, a record high that reflects renewed demand as buyers face a heavier load of upfront costs and the possibility that the stamp duty regime could change in the Budget. For homeowners who choose to rent temporarily, the market offers a potential hedge against swift reductions in house prices, even as landlords face higher service charges and mortgage costs.

In sum, the London market remains bifurcated: the core of central and prime districts has suffered double-digit price corrections and longer selling times, while outer suburbs with strong family appeal continue to attract attention when priced right. Market watchers say the immediate path forward hinges on policy clarity in the autumn Budget, with buyers awaiting signals before committing to large-scale purchases. The outcome could reset the balance between sellers’ expectations and buyers’ willingness to act, potentially setting the stage for a more active spring if tax reform proves less punitive than feared or if interest rates ease at a pace that restores affordability for a broader cohort of buyers.