Analysis of the prime London housing market by independent property analysts LonRes shows continued subdued sales activity in February, with values falling sharply, though some indicators suggest a potential recovery.
Sales transactions were down 31.2% year-on-year and 14.7% below the pre-pandemic February average (2017‑2019). New sales instructions fell 5.4% on the year but were 34.8% higher than the 2017‑2019 February average, while the stock of homes for sale was 10.3% higher than a year earlier, having eased from a peak in September 2025.
Average achieved prices fell 10% annually and remained 8.2% below pre-pandemic levels. In the £5m+ market, transactions were down 54.8% year-on-year, with new instructions falling 3.2%, though available stock rose 9.7% over the 12 months to the end of February.
In prime lettings, average rental values declined 0.5% year-on-year, continuing the trend seen in December and January, though rents remain 32.7% above pre-pandemic averages. Lets agreed increased 39.1% year-on-year, while new instructions rose 26.6%. The number of available rental properties also grew, with 38.7% more homes on the market compared with February 2025.
Monthly Prime Data – February
Prime Sales | Prime Lettings | |||
Annual Change | Change vs. 2017-19 (pre-pandemic) | Annual Change | Change vs. 2017-19 (pre-pandemic) | |
Achieved prices/rents | -10.0% | -8.2% | -0.5% | 32.7% |
Properties sold/let | -31.2% | -14.7% | 39.1% | -48.2% |
New instructions | -5.4% | 34.8% | 26.6% | -48.9% |
Source: LonRes (Note: all price and rent figures based on £ per sq. ft. values)
The prime London sales market produced some negative figures in February, although the forward-looking indicators suggest some signs of improvement. Transactions and prices both saw substantial falls from what were already relatively weak positions, but under offer numbers picked back up after slowing around the turn of the year.
Values were most affected, with the average achieved price across all prime London falling by 10% on an annual basis. This is the largest fall since the global financial crisis of 2008-09 and was driven primarily by prime central London where values have fallen 23% below their 2014/15 peak. This compares to single-digit falls in the other prime catchment areas.
The deals feeding into the latest pricing data are likely to have been agreed in the closing months of 2025 when the market was impacted by uncertainty surrounding potential tax changes in the Budget. It appears buyers took advantage of this to drive some hard bargains. It will be interesting to see whether this drop is temporary or if there is a sustained reset of values.
Chart 1 – House Price Change Since 2014/15 Peak by Area
Source: LonRes
The average discount from initial asking price increased to 10.8% in February, from a revised 10.0% in January. Of all the properties sold in February, 58.8% did so after seeing at least one asking price reduction. Both measures are at their weakest since 2018-19, highlighting the lack of demand in the market over recent months. Transactions in February fell by 31.2% compared to a year ago and by 14.7% compared to the 2017-2019 (pre-pandemic) February average (table 1).
On the supply side, new instructions across prime London in February were 5.4% lower than the same month last year but 34.8% higher than the 2017-2019 February average (table 1). Stock on the market at the end of February was up 10.3% compared to a year earlier, though it has fallen back by around 8% from the peak reached in September 2025. The number of price reductions in February was 35.7% higher than the same month last year and 73.3% higher than the 2017-2019 February average.
While the majority of the data so far this year has been negative, there are some demand metrics that offer a little optimism. The number of under offers across prime London in February was 8.1% higher than the same month last year and 29.2% higher than the 2017-2019 February average. The number of enquiries from buying agents, who represent purchasers that are generally serious and motivated, has picked up after slowing for much of 2024 and 2025. The current 12-month average of enquiries is more than two and a half times the levels seen in 2017-2019.
Chart 2 – Index of Buying Agent Enquiries, 12 Month Rolling Average
Source: LonRes
The super prime segment has tracked the wider market closely so far in 2026, with activity a long way behind the equivalent period in 2025, a lot of stock on the market, but signs of improvement in the under offer numbers.
£5m+ transaction volumes in February were 54.8% lower than the same month last year and 5% lower than the 2017-2019 February average. While a single month of data from a relatively small market can overstate the situation, activity has been trending lower for many months. Under offer numbers rose by 15% compared with last February, potentially indicating an improvement in sales in the near future.
New instructions in February recorded a 3.2% fall compared to a year earlier but this is from a high starting point. At the end of February there were 9.7% more £5m+ properties on the market than at the same time last year and stock levels are significantly above the long-term average.
With more property for sale there have been correspondingly high levels of price reductions. At 55.9%, the proportion of sold £5m+ properties that were reduced prior to sale is higher than a year ago (47.1%) and the long-term average of 35.6%. Similarly, £5m+ properties sold in February did so with an average discount of 13.6%, compared to 10.0% in the same month last year and a long-term average of 9%.
Table 2 – Discounts and Price Reductions, £5m+ Prime London Sales
Feb-26 | Feb-25 | 2015-24 ave. | |
Average discount (initial asking price to sold price) | 13.6% | 10.0% | 9.0% |
Proportion of sold properties reduced prior to sale | 55.9% | 47.1% | 35.6% |
Source: LonRes
Lettings activity across prime London continued to recover in February. Rental growth remained negative on an annual basis, but the latest monthly figures suggest that further falls are unlikely in the near future.
LonRes data for February indicated an annual increase of 39.1% in lets agreed and a 26.6% increase in new instructions (table 1). The stock of available rental properties increased on an annual basis, with 38.7% more homes on the market across prime London at the end of February than a year earlier.
Average rental values fell by 0.5% on an annual basis in February (table 1), the third consecutive month with an annual decrease, although February saw a small increase on a monthly level, suggesting the falls have bottomed out for now. Longer-term, rents are 32.7% above their 2017-2019 (pre-pandemic) average.
Broken down by area*, much like the sales market, prime central London is underperforming other catchments. In PCL, average rents in February were 22.2% above their level from January 2020 compared to 26.3% across all prime London.
Chart 3 – Rental Growth Since January 2020 by Area
Source: LonRes
Nick Gregori, head of research, LonRes said: “February was a poor month for the prime London sales market, with a small increase in under offer numbers the only positive among a set of otherwise uniformly negative results. With transaction data based on time of exchange it is likely that we are now seeing the full effect of the disruption caused around the time of the Budget at the end of last year. The Budget looks to have caused low levels of activity and significantly reduced pricing for the deals that were agreed, particularly in higher-value prime central areas.
“It may be a case of ‘out of the frying pan and into the fire’, for as soon as the Budget’s impact on the market was absorbed we now have further economic uncertainty introduced by the conflict in Iran. This has already caused lenders to increase mortgage rates as inflation fears are priced into their borrowing costs, specifically the risk of an oil price spike. Given the relatively recent memory of significant energy price inflation in 2022 this is unlikely to improve sentiment in relation to the global economy.
“London’s status as a safe haven is typically boosted whenever there is conflict or political upheaval elsewhere in the world, but tax and policy changes have in general made it significantly less welcoming for international high net worth individuals. We know there are significant numbers of people living in the Middle East with links to London but at this stage it is too early to tell how many might return and therefore what the impact on the prime London property market could be.
“The prime London lettings market saw activity continue to recover in February, with large rises in new instructions and agreed lets, admittedly still off a relatively low baseline. The increased availability of homes to rent compared to the past couple of years has led to small rental falls for the last three months, but we will see over the remainder of the year what impact the removal of bidding over asking price – introduced on May 1st as part of the Renters’ Rights Act – has on rental values.”
Read the orginal article: https://propertyindustryeye.com/prime-london-sales-slide-while-lettings-activity-rises-says-lonres/?utm_source=rss&utm_medium=rss&utm_campaign=prime-london-sales-slide-while-lettings-activity-rises-says-lonres
