The Prime Central London property market is facing its toughest conditions in almost a decade with house prices falling at their sharpest annual rate since 2015 and transaction volumes remaining subdued.
New data from LCP Private Office shows that values in Prime Central London (PCL) dropped 4.6% in the 12 months to September as high supply, political uncertainty and a cautious buyer base continued to weigh on the market.
Liam Monaghan (main picture), Managing Director of LCP Private Office, says the looming Autumn Budget and speculation around potential taxation changes has caused many prospective buyers to delay their decisions.
“The Prime Central London sales market remains challenging, with caution and a lack of urgency amongst buyers, amidst high supply, falling prices and ongoing economic and political uncertainty,” he says.
OPPORTUNISTIC BUYERS
However, Monaghan points out that some opportunistic buyers were beginning to take advantage of softening prices.
He says: “Some are capitalising on the best value seen in over a decade. Over the last few months, we have seen an encouraging increase in new buyer enquiries, both homeowners and investors keen to take advantage of significant deals in a far less competitive market.”
While the sales market cools, the rental sector has surged. The third quarter of the year was the busiest so far in 2025, with rental growth for both re-lets and renewals reaching their highest levels of the year.
RETURN TO OFFICE
According to LCP, void periods have shortened sharply as tenant demand rebounds, with 29% of new tenants in Q3 coming from European states – a sign of the return of international students and professionals to the capital.
The shift has also been helped by a wider return to office working patterns across the city.
RENTERS’ RIGHTS ACT
Monaghan adds thatt the implementation of the new Renters’ Rights Act – which has introduced the most significant reforms to the private rented sector in a generation – was creating some short-term unease among landlords. But he adds that the fundamentals of the market remained sound.
“There is no cause for concern,” he says. “The fundamentals of the private rented sector remain unchanged, with stringent tenant referencing, professional management and trusted advice remaining the key principles for a successful buy-to-let investment.”
Despite the near-term headwinds, Monaghan suggests that the combination of lower prices, stabilising inflation and the potential for interest rate cuts in 2026 could set the stage for renewed confidence in the PCL market next year.
