Challenging” conditions remain in the London homes sales market, due to ongoing economic and geopolitical uncertainty, but our monthly data shows offers and exchanges holding up, albeit with sales taking longer to complete. Vendors who adopt “proactive” strategies are most likely to achieve sales. Improving affordability and pent-up demand could support a strong rebound in activity when more stable conditions return.
Enquiries to the Chestertons portal – the first stage in the buying process – fell by 20% YoY in June, maintaining a negative trend throughout 2026, as would-be buyers defer decisions while global and UK uncertainty persists. The corollary of this is that we have seen increased enquiries on our Lettings portal in this period.
Nevertheless, offers and exchanges are both up 11% – mostly reflecting committed buyers who entered the process amid healthier post-Budget demand in January and February.
Economic and housing market indicators from a range of institutions paint a mixed picture. Bank of England Base Rates have been held steady at 3.75% for four months. Although the ceasefire in the Middle East has been fragile, 10-year Gilt rates have remained below the recent peak of 5.23%. Unemployment has remained below expectations and there has been cumulative growth in real earnings above inflation for three years.
The three main national price indicators, from the ONS, Lloyds and Nationwide, all show prices demonstrating low YoY growth nationally, however, Lloyds (formerly reporting as Halifax) showed London falling 1.1% and the wider South East declining by 2.0% in June.
This has contributed to a greater relative increase in ‘affordability’ in London relative to other regions, although sales prices clearly remain significantly higher. According to the Nationwide, the multiple of house prices to average earnings has fallen to 8.7x in Q2, from 11.6x in 2016, a reduction of 25% reflecting rising incomes and downwards pressure on pricing. By comparison, for the UK as a whole, it has narrowed by from 6.9x to 5.6x.
Against this backdrop, Adam Jennings, Head of Residential at Chestertons, advises: "Although some buyers are taking longer to make decisions, demand remains for quality homes that are priced appropriately. The stabilisation in the number of sellers reducing their asking prices suggests that pricing expectations are becoming more realistic, helping to create a healthier and more balanced market. It is important to recognise these slow market conditions are unlikely to last forever and, if there is a convincing ceasefire and a return to political stability in the UK, there could be a rapid release of pent-up demand. If potential buyers have been holding off for unrealistic price reductions, they could lose out”.