February saw average house prices across prime London rise on an annual basis for the first time since June 2023, latest data from Lon Res reveals.
Sales activity was a little behind the same month last year but above the longer-term average.
The £5m+ market recovered from a slow January while the lettings market remained subdued.
New sales instructions in February were 24.0% higher than last year and 47.5% higher than the 2017-2019 (pre-pandemic) February average .
AVAILABLE HOMES INCREASING
The stock of available homes for sale also continued to grow. At the end of February it was 11.6% higher than a year earlier and 37.5% up on February 2020.
Average achieved sold prices grew by 0.6% on an annual basis in February (table 1), the first increase in more than 18 months. Compared to 2017-2019 (pre-pandemic) levels, values are currently 1.2% lower.
There were 8.4% fewer transactions in February than a year earlier but 6.8% more than the 2017-2019 (pre-pandemic) February average.
On an annual basis, under offer numbers increased by 11.0% and are 18.8% up on the 2017-2019 (pre-pandemic) average for the time of year.
After a slow January, the £5m+ rebounded in February with 13.8% more transactions than a year earlier.
New instructions in this market increased by 30.0% over the same period, with stock on the market also continuing to rise – the number of £5m+ homes available for sale across prime London has risen by 21.1% over the 12 months to the end of February.
RENTAL GROWTH INCREASED
Annual rental growth across prime London increased to 6.0% in February, the highest level since November 2023. Average rents were 33.3% above their 2017-2019 (pre-pandemic) average.
LonRes data for February indicated an annual decrease of 42.1% in lets agreed and a 29.4% decrease in new instructions, with activity on both measures remaining well below pre-pandemic levels.
The stock of available rental properties decreased on an annual basis, with 19.9% fewer homes on the market across prime London at the end of February than a year earlier.
Nick Gregori, Head of Research, LonRes, says: “The main headline for February was that sales values across prime London recorded an annual increase for the first time since June 2023.
“While it’s only a single month of data and a small rise (+0.6%), a sign of return to growth might motivate buyers to become more active. This in contrast to a long period where demand has been depressed by fears of further price falls.
“However, the number of homes on the market is likely to mitigate against significant price growth, with 11.6% more stock for sale than a year ago meaning buyers have more choice and therefore more negotiating power.
“Transaction levels for the year so far are broadly in line with the same period in 2024, but under offers are up significantly, potentially indicating rising activity in the coming months.”
BORROWING COSTS
He adds: “The outlook for values over the remainder of 2025 also continues to be impacted by expectations around borrowing costs. Recent reductions in mortgage rates have led to improving mainstream property markets around the UK, potentially boosted by the ending of a stamp duty discount.
“While the prime London markets are less directly affected by these factors, they do feed into wider positive sentiment. However, rising inflation in the UK may slow the pace of future interest rate cuts.”
LACK OF RENTAL STOCK
And he says: “The prime London lettings market continues to be constrained by a lack of stock.
“Robust demand and low levels of new supply are sure to put upward pressure on rents so it’s no surprise that annual rental growth increased to 6.0% in February, the highest rate for 16 months.
“Within this average figure, larger properties are leading the way – flats with three or more bedrooms have seen the strongest annual growth and houses have been outperforming more generally since the pandemic.”
