Current Trends in London's Property Market
Seize a cost-effective home in London or popular commuter areas, according to experts, as the current moment offers attractive deals
London's property market is undergoing a transformation, shaped by a combination of economic uncertainties, policy changes, and the lingering effects of the pandemic. Here's a closer look at the key trends shaping the market for potential buyers:
1. Market Activity and Resilience
- Increased Listings and Sales: Despite economic challenges, new property listings in London increased by 6.5% year-on-year in May 2025, and sales agreements rose by 5.9%[1].
- Stable Prices and Rents: While prices have softened slightly, particularly in Prime Central London, overall stability is observed across the market[1].
2. Price Adjustments
- Decline in Prices: London saw a 1.4% decrease in house prices from April to May 2025, with an annual increase of 2.2%[3].
- Variation by Property Type: Detached homes have shown a 4.5% annual increase, while other property types have experienced varying price changes[3].
3. Tax Policy Changes
- Non-Dom Tax Reforms: Changes to non-domicile tax status could impact buyer sentiment, but London's status as a financial hub and cultural hub maintain its appeal[5].
- New Temporary Resident Scheme: This aims to maintain competitiveness for international residents, replacing the non-dom status[5].
4. Economic and Global Factors
- Mortgage Rates: Lower mortgage rates have improved affordability, particularly for high-deposit borrowers[1].
- Global Economic Impact: The strengthening US dollar has increased the appeal of London's high-end real estate for American and dollar-linked buyers[5].
Opportunities for Buyers
- Increased Supply: Higher listings offer more choices for buyers[1].
- Price Stabilization: Lower prices in some areas provide opportunities for buyers looking for bargains[3][5].
- Affordability Improvement: Wage growth exceeding inflation and lower mortgage rates have marginally improved affordability[1].
In summary, while Labour's tax policies and the pandemic aftermath present challenges, London's property market offers opportunities for prepared buyers due to increased listings, stable prices, and global economic factors. However, the direct impact of Labour's tax policies is not explicitly detailed in the available data but is likely intertwined with broader economic and policy shifts affecting the market.
The current market slump is attributed to a surplus of homes for sale in London and a lack of buyers. Experts suggest that the current situation presents a rare opportunity to buy a property in London, particularly for families who work in the city or those who moved out during the pandemic and wish to return. The market crunch has led to a flood of properties entering the market and prices dipping, particularly in the M25 commuter belt.
Foreign buyers face additional stamp duty charges, including a 5% second home surcharge and a 2% non-resident surcharge, which can amount to a significant sum. In recent years, the price gap between London properties and the average English property has been gradually closing, with London homes now worth 95% more than the typical English one.
Since January 2016, areas like Barnet, north London, have seen home prices drop by 3.9%, while homes in sought-after Richmond fell by 3.8%. In Redbridge, north-east London, property prices fell 5.4% from January to May. The average London property is now worth £565,637, compared to £290,395 in the rest of England.
James Rawes, at Garrington Property Finders, believes that London will continue to be a popular place to live and will recover from the slump, but the question is when.
- In the current London property market, a rise in property listings and sales, as observed in May 2025, indicates increased activity despite economic challenges [1].
- The fluctuation in house prices in London, shown by a 1.4% decrease from April to May 2025 but an annual increase of 2.2%, presents variations in the market [3].
- The potential buyer's lifestyle and financial situation may be improved by the lower mortgage rates, which have increased affordability, particularly for high-deposit borrowers [1].
