Activity in London’s prime residential market remained subdued in July, with transaction volumes falling despite rising numbers of properties going under offer and new instructions.
According to LonRes data, the number of sales transactions was 31.7% lower than a year ago and 7.8% below the 2017-2019 pre-pandemic July average.
At the same time, homes under offer increased by 17.5% year-on-year and were 36.0% higher than the pre-pandemic average for the month, suggesting that deals are taking longer to complete or are falling through more frequently.
Indeed, the proportion of fall-throughs in July was 19.9% higher than a year earlier and 48.0% above the 2017-2019 average, reflecting ongoing caution among buyers and sellers.
PRICE REDUCTIONS ACCELERATED
On the supply side, new listings rose by 22.4% compared to July 2024 and were 9.4% higher than the 2017-2019 July average. Total stock of available homes at the end of July was 15.8% higher than a year earlier and 31.5% above the level five years ago.
Price reductions also accelerated, with the average discount from the initial asking price reaching 9.3%, up from 8.2% in June.
Average achieved prices across prime London were broadly stable, down just 0.4% year-on-year and 0.8% below pre-pandemic levels, reflecting relatively small price movements over the past 18 months.
MIRRORED MARKET
The top-end £5m+ segment mirrored these trends, with transactions down 13.3% year-on-year but slightly above the pre-pandemic July average.
New instructions in this segment rose 28.2% year-on-year and 89.6% above the 2017-2019 average, while stock increased by 23.4% compared to last year, approaching record highs set in June.
RENTAL GROWTH
The rental market showed a similar pattern of modest growth amid rising supply. Annual rental growth in prime London slowed to 3.3% in July, down from a revised 5.4% in June, although rents remain 34.8% higher than pre-pandemic levels.
LonRes data indicated a 7.7% drop in lets agreed year-on-year, while new instructions rose by the same margin. The total number of rental properties on the market grew 18.3% from July 2024, reaching a four-year high.
Prime central London continued to outperform other sub-markets, with annual rental growth of 5.1% in areas such as Mayfair and Knightsbridge. Across the broader prime London market, rental growth has averaged around 3% since early 2024, well below the double-digit rises seen in 2023.
Overall, the data points to a market characterised by abundant supply and cautious demand, with under offers and new listings rising but transactions remaining subdued and price growth largely flat.
HIGHER FALL THROUGHS
Nick Gregori, Head of Research, LonRes, says: “July is often a quiet month for the prime London sales market, and this was partly true in 2025.
“Sales volumes were certainly quiet, well down on last year and continuing a run of low transactions starting back in April.
“But other metrics suggest a busy market. Under offers have been positive for two months, which should turn into more transactions in the near future. Vendors are still active too, with new instructions and price reductions higher than usual for the time of year.
“The slight concern is the level of fall throughs, which have been higher than the long-term average for around three years, and indicate a potential lack of confidence in the market from both buyers and sellers.”
AUTUMN BUDGET FEARS
And he adds: “The £5m+ market continues to broadly follow the same pattern as the rest of the market: high supply, lots of price reductions, but reasonable levels of demand. Stock on the market remained close to its record high. At the very top end, July saw a number of £15m+ exchanges, a vote of confidence for London as a destination for high net worth buyers.
“A quiet summer market is traditionally the time to take stock in anticipation of a busy autumn. Unfortunately, this year, any positive sentiment could be outweighed by another extended build up to the Budget, with fears around tax rises and a £40bn+ hole in the government finances dominating the agenda.
“On a happier economic note, UK GDP grew faster than expected in Q2 and there was another cut to the base rate, which should feed through into better mortgage rates for buyers.
“Available stock across the prime London lettings market continued its recovery in July as new instructions increased while agreed lets fell. Annual rental growth slowed to 3.3% in July, with prime central areas seeing the highest rises so far this year.”
