Prime London house prices continued to decline in May despite signs of improving activity, as a growing supply of homes and rising numbers of price reductions continued to weigh on the market.
New analysis from LonRes shows average achieved sale prices across prime London were 5.1% lower than a year earlier in May and remain 4.7% below pre-pandemic levels.
While transaction volumes increased by 6.7% year-on-year, the longer-term picture remains subdued, with sales still 13.1% below the average recorded between 2017 and 2019.
The market is also contending with elevated levels of stock. New instructions were 2.2% higher than a year ago and more than 10% above pre-pandemic norms, while available stock at the end of May was almost 6% higher than a year earlier.
GREAT EXPECTATIONS
The increase in supply is forcing many sellers to adjust expectations. LonRes found price reductions rose by 19.4% compared with May last year, with every month of 2026 recording the highest number of reductions ever seen for that particular month.
However, there were signs that buyer demand remains present beneath the surface.
The number of homes going under offer increased by 8.1% compared with a year ago and was almost 9% above the pre-pandemic average, suggesting transaction levels could improve later in the year.
The picture at the top end of the market remains mixed. Transactions involving homes worth more than £5m fell by 20.6% year-on-year in May, although the number of properties going under offer in this sector rose by 75%.
MIXED PICTURE
Nick Gregori (main picture, inset), Head of Research at LonRes, says: “The data for prime London sales remained mixed in May. The year-on-year comparisons for the month appeared positive, but looking at the past three months and taking the longer-term context into account reveals a market struggling to build momentum.
“With lots of stock on the market and high numbers of price reductions, it is no surprise that average sale prices are down compared to the same time last year. But they have risen from the low point reached earlier this year, suggesting some buyers may be starting to see value.”
The prime lettings market delivered more positive news. Average rents increased by 2.7% year-on-year in May, the strongest rate of growth since August 2025, while lets agreed rose by 16.6%.
Gregori adds: “Meanwhile rental values across prime London bucked their recent trend by recording the highest level of growth in nine months.
“Some agents have reported that landlord behaviour is already changing, with asking prices being increased to allow more room for price negotiations within the new rules.”
