Prime London house prices fell by 7.1% in September as buyers continued to hold the upper hand in a sluggish market.
New figures from LonRes reveal that sales transactions dropped 16.8% compared with September 2025. It was the quietest September for sales since 2016.
Meanwhile, achieved prices were 8.2% below their pre-pandemic average, based on price per square foot.
Despite a modest recovery from the summer slowdown, the market remains under pressure. Buyers are cautious, transactions are falling and price reductions remain widespread.
Sellers face double-digit discounts
LonRes found that properties sold for an average of 10.1% below their original asking price in September.
However, the size of the discount depended heavily on how long a property remained on the market.
Homes selling within three months achieved prices just 3.8% below their initial asking price during the third quarter.
By contrast, properties taking between six and 12 months required an average reduction of 11.1%.
The figures underline the importance of realistic pricing from the outset.
Price reductions during the third quarter were 42.6% above the 2015–2024 average. Meanwhile, property withdrawals increased by 15.8% compared with last year.
New sales instructions fell 13.2% annually in September. However, they remained 23.8% above the pre-pandemic September average.
The number of properties available for sale was 3.1% lower than a year earlier.
£5m-plus market struggles despite rise in instructions
The super-prime market also remains subdued, despite signs of renewed activity following the summer.
New instructions for properties priced above £5m jumped 32.5% in September compared with last year.
However, transactions fell 12.5% over the same period.
Across the third quarter, £5m-plus sales declined 9.3% annually. They were also 15.9% below the previous decade’s average.
Meanwhile, price reductions in this market were 88.8% above their long-term average.
LonRes said uncertainty continued to affect discretionary buyers and sellers, particularly at the top end of the market.
Prime London rents rise at fastest rate in 18 months
While sales prices continued to fall, the prime lettings market recorded stronger rental growth.
Average achieved rents increased by 4.6% annually in September, the fastest pace in 18 months.
Consequently, rental values now stand 43.5% above their pre-pandemic average.
However, lettings activity weakened.
The number of lets agreed fell 14.9% compared with September 2025. Meanwhile, new instructions increased by 3.4%.
Available rental stock rose 6.9% annually, although supply remains below historical norms.
The lettings activity figures exclude Prime Fringe postcodes because LonRes has changed its listing collection methods.
Renters’ Rights Act creates two-tier market
LonRes also highlighted the growing divide between rental properties covered by the Renters’ Rights Act and those outside its scope.
Tenancies with annual rents exceeding £100,000 fall outside the Act’s main assured tenancy framework.
As a result, some of London’s most expensive rental markets operate under different rules.
In Mayfair and St James’s, 36% of properties let during 2026 exceeded the £100,000 annual threshold.
The proportion also exceeded 20% in Knightsbridge and Belgravia, and South Kensington.
LonRes suggested that regulatory changes could be influencing landlord behaviour and rental pricing.
Some landlords may have exited the market. Others may be seeking higher rents to compensate for perceived additional risks.
Budget uncertainty weighs on buyers
Nick Gregori, head of research at LonRes, said September’s improvement had failed to reverse the wider slowdown.
“Activity across prime London – from both buyers and sellers – improved relative to the summer but remained sluggish for the time of year.”
He said borrowing costs, weak expectations for price growth and global uncertainty continued to affect demand.
Gregori also pointed to speculation over property taxation ahead of the Budget.
“There are unlikely to be any giveaways for prime property buyers in the Budget at the end of October, so the best that can be hoped for is no further damaging changes.”
Meanwhile, the £5m-plus market remains particularly sensitive to uncertainty.
Gregori said the recent improvement could prove temporary unless confidence returns.
On lettings, he added:
“The prime London lettings market saw a further acceleration in rental growth in September.”
He suggested the Renters’ Rights Act could be affecting both landlord supply and asking rents.
For sales agents, the message from September’s figures is clear. Buyers remain selective, and properties that start with unrealistic asking prices risk requiring substantially larger discounts later.
