Pre-Budget speculation continues to have an adverse impact on the prime London sales market with values, new instructions and sales all falling in October.  

This is according to property data consultancy LonRes which says it’s a stark contrast to October 2024, where the opposite happened and deals were brought forwards ahead of the Budget, making annual comparisons appear significantly more negative.

Average values across prime London fell by 5.8% on an annual basis in October and were 4.9% below their pre-pandemic (2017 – 2019) average level.  This was the biggest annual decrease since February 2024.  The average discount from initial asking price decreased to 9.3% in October compared to 10.7% in September.

In October, new instructions were 2.1% lower than the same month last year but 8.0% higher than the 2017-2019 October average.  Price reductions increased by 32.9% on an annual basis.  In the context of the pre-Budget uncertainty, these diverging trends suggest that current vendors remain motivated while some potential new vendors may be holding off until the dust settles.

There were 39.8% fewer transactions in October than the same month a year ago, but 2.8% more than the 2017-2019 (pre-pandemic) October average.  Although transaction levels have been weak for many months, the significant annual fall here tells us much more about the high number of sales in October 2024 – around 70% above the 2017-19 October average – than what’s going on now. 

The number of properties going under offer rose by 1.9% compared to October last year and was 23.4% higher than the 2017-2019 October average.  Fall throughs remain high, up by almost 50% compared to the 2017-19 October average, explaining the mismatch in results between under offers and sales.  But fall throughs are lower than in 2022 and 2024 so this is not a new trend or a significant shift.

Weekly data on transactions provides further evidence of the importance of tax changes – including speculation about future ones.  

Looking at cumulative sales this year compared to 2024, the year started slowly for prime London but then picked up pace in February.  By week 14 (directly after the stamp duty holiday ended on 31 March) of 2025, sub-£5m sales were 18.8% higher than a year earlier.  They have steadily declined relative to 2024 since then, with the drop off accelerating in recent weeks and reaching -11.8% at the end of week 44 (late October). 

£5m+ sales in 2025 have followed a different path, taking longer to get going.  £5m+ sales caught up with 2024 towards the end of April and kept pace through Spring and early Summer.  From week 33 (mid-August), when news of major property tax reforms emerged, £5m+ sales have slowed significantly, with the year-to-date total now 18.0% below last year.

The top end of the market has been impacted most strongly by speculation around tax changes, dampening activity by potential buyers and sellers.

In October there were 64.7% fewer £5m+ transactions than the same month a year ago, and 21.7% fewer than the 2017-2019 (pre-pandemic average) October average.  New £5m+ instructions were 18.9% lower than the same month last year but 1.4% higher than the 2017-2019 October average.  The number of £5m+ homes available for sale across prime London grew by 15.6% over the 12 months to the end of October.

Single month comparisons can be volatile and the above figures are all affected by the strength of the market last October.  But looking at the past three months combined the picture is similarly negative.  For August to October 2025, there were 50% fewer transactions than a year earlier.  While the pace of growth for new supply has slowed relative to earlier this year – down 15.5% in Aug-Oct vs. last year – the number of price reductions in the £5m+ market continues to rise, up by 27.0% compared to a year ago and more than double the 2017-2019 Aug-Oct average. 

Activity is increasing across the prime London lettings market, particularly on the supply side.  Average annual rental growth remained in the 2 to 5% range where it has been for most of the past 18 months, though there are some variations by area.

Overall annual rental growth in October was 2.2% (table 1), down from a revised 2.3% in September.  While this is the lowest rate in a year, it continues a trend of low, steady growth that has replaced the rapid rises that characterised 2022 and 2023.  Rents across prime London are now 38.5% above their 2017-2019 (pre-pandemic) average. 

Broken down by sub-market*, performance has started to diverge between our core catchments.  Prime central London – covering neighbourhoods such as Mayfair and Chelsea – has gone from best to worst in a few months, recording a 1.0% annual fall in October. 

Nick Gregori, head of research at LonRes, says: “The prime London sales market remained fragile in October.  Under offer levels continue to look robust but stubbornly refuse to translate into actual sales, with the existing lack of confidence in the market exacerbated by fears of significant tax changes in the upcoming Budget.  This has started to impact prospective sellers too, with new instructions decreasing, though the volume of stock on the market remains high.

“Unsurprisingly these dynamics are having a negative impact on values, with average achieved prices falling at their fastest rate since February 2024.  However, with many metrics based on annual comparisons, the downbeat picture painted by the latest figures may be overstating things.  Last October saw record activity as deals were rushed through ahead of anticipated tax changes, while this year we are seeing something approaching the polar opposite.  As is often the case, the longer-term context is important and here it shows a market that is below average for the time of year, but not chronically so.

“The tax uncertainty continues to have a larger impact on the top end of the market.  Transaction levels over the past three months – the period since the mooted changes started appearing in the press – are significantly down.  Despite sentiment being so poor, multiple £10m+ sales have exchanged in the past couple of weeks, suggesting that there are buyers out there if they see value in a deal.

“Beyond direct property taxes, speculation is growing that the Chancellor will be increasing income tax in the Budget.  Borrowing costs are set to remain high, with the Bank of England cutting their base rate slower than previously expected in the face of inflation sticking above the 2% target.  In combination, these factors will erode buying power from consumers, putting further pressure on the property market.

“Stock on the rental market across prime London increased in October following a flurry of new instructions, posting annual growth of 42.4%.  While activity remains robust, rental growth has unsurprisingly slowed, falling to an annual rate of 2.2%, the lowest in a year.”