Prime London’s property sales market recorded its weakest August performance in nearly two decades, with transactions falling to their lowest level since 2008, according to data from LonRes.
The prime London data platform reported that average achieved sold prices fell 7% year-on-year in August, with values standing 6.7% below pre-pandemic levels. Sales transactions declined 19% compared to August last year and were 25.6% lower than the 2017-2019 pre-pandemic August average.
New sales instructions dropped 22.1% annually and were 17.9% below pre-pandemic levels. The stock of available homes for sale at the end of August was 1.1% lower than a year earlier and 4.9% below the peak reached in September last year.
Top-end market weakens
The £5 million-plus segment showed similar trends, with transactions down 18.8% year-on-year in August. New instructions for properties in this bracket decreased 10.4% over the same period, while the number of £5 million homes available for sale was 6.4% lower than a year earlier.
Nick Gregori, Head of Research for LonRes, said: “There are quiet Augusts and then there are quiet Augusts. With the market in general lacking momentum so far this year, the low level of activity this summer is no great surprise, but 2026 saw the lowest number of new instructions across prime London in an August since 2011, and the lowest level of transactions since 2008.”
Gregori noted that while the new Labour leadership has avoided damaging speculation around property taxes compared to last year, external factors continue to affect the market. “Persistent inflation, in part driven by the conflict in Iran, continues to limit the prospect of lower interest rates,” he said. UK government bonds saw a sharp spike in early September, pushing up short-term mortgage costs and further dampening buyer demand.
The challenges facing the prime London market reflect broader concerns about tax policy’s impact on the housing market that have been raised by industry observers.
Lettings market shows mixed signals
The prime lettings market displayed lower activity levels but continued rental growth. LonRes data for August shows a 27.5% annual decrease in lets agreed and a 3.5% fall in new instructions. However, the stock of available rental properties increased 6.1% year-on-year.
Average rental values across prime London rose 3.8% annually in August, with average rents standing 41.4% above their pre-pandemic average.
Gregori said the ‘wait-and-see’ approach in the sales market has directly impacted lettings. “For reluctant buyers, the rental market allows a chance to ‘try before you buy’. For those deciding whether or not to sell, the rental market offers a chance to get some income in while waiting for more favourable sales market conditions,” he explained.
The slowdown in prime London comes as the wider property industry faces operational challenges, with some firms reporting increased costs.
Market outlook
The data suggests the prime London market remains constrained by a combination of domestic policy uncertainty ahead of the Budget and external economic pressures. The reduction in both supply and demand indicates a market where buyers and sellers are adopting a cautious stance, with many choosing to rent rather than commit to purchases in the current environment.
With mortgage costs rising following recent bond market movements and inflation remaining elevated, the outlook for increased transaction volumes in the near term appears limited. The lettings market’s relative strength, with rental values continuing to grow despite lower activity levels, suggests demand for prime London property remains present but is being channelled into the rental sector rather than sales.
