London sales market outlook
London property prices typically trend upwards, with only short dips during economic downturns. At present, values are largely stable, although Prime Central London prices have fallen back to 2014 levels. This has created opportunities for buyers in areas such as Wandsworth and Hammersmith & Fulham that were previously less affordable, according to the latest research from Chestertons.
Across 2025, prices are expected to remain steady or decline slightly, depending on location and property type.
Key factors shaping the sales market
The Bank of England base rate has fallen to 4% and is forecast to drop further to 3% by 2026. Inflation stood at 3.8% in the 12 months to July 2025, potentially slowing additional rate cuts. Steve Reed has replaced Angela Rayner as housing secretary, while Matthew Pennycook remains housing minister.
Average price trends for London - July 2025
Prime Central London: £1,078,137, down 6.6% year-on-year. Values are at the same level as in October 2014.
Greater London: £537,853, down 0.6% year-on-year. Prices are equivalent to July 2022.
Lower borrowing costs are expected to boost confidence and encourage buyers to return to the market.
Market activity
Buyer demand has risen nearly 12% year-on-year, with sales agreed up 8%. The increase in supply is giving buyers more choice, though sellers must price carefully. Richard Donnell of Zoopla noted: “Setting the wrong price can mean it will take more than twice as long to find a buyer and sell your home.”
For the remainder of 2025, studios and one-bedroom flats may dip, while larger flats are expected to remain stable or rise. House prices should hold steady, with around one-third of agents predicting growth for three-bedroom homes.
Chestertons’ view: “The London property market can be considered great value for buyers at the moment, with property prices at the same level as a decade ago in the Prime market and three years ago in the Greater London market.
"With mortgage rates lower than the last few years and Bank Base Rates forecast to reduce to 3% in 2026, now is a great time for well-priced sellers and those who have resisted buying over the last few years to take a fresh look at moving. Critical to a successful purchase and sale is knowing the local market performance for the property being sold and bought.”
London rental market outlook
Traditionally, rents rise more slowly than property prices, reflecting wage-linked affordability. In recent years, however, London rents have increased at a faster pace than sales values, driven by reduced supply after the pandemic and strong tenant demand. At the same time, wage growth has accelerated.
After a busy summer, rents are expected to remain stable through the rest of 2025.
Key factors shaping the rental market
Average earnings rose 5% between April and June 2025, supporting rental growth slightly ahead of inflation.
Housing minister Matthew Pennycook rejected amendments to the Renters’ Rights Bill put forward by the House of Lords, stating the government is “willing to make sensible concessions in some areas, but most of the amendments in question serve to undermine the core principles of the Bill and for that reason we cannot accept them.”
Rental price trends
Prime Central London: £2,918, up 2.05% year-on-year. Average rents have held steady since June 2025.
Greater London: £2,065, up 2.7% year-on-year. Prices have stabilised in recent months.
Some landlords have exited the market due to legislative changes, while others are adapting and may benefit from stronger long-term returns.
Market activity
Zoopla data shows tenant demand is 16% lower than in 2024, but still 60% higher than in 2019. With the Renters’ Rights Bill close to Royal Assent, supply conditions may continue to evolve. For the rest of 2025, rental growth is likely to be stronger for houses than for flats. One-bedroom flats and four-bedroom houses face the greatest supply shortages, while overall rents are expected to remain stable.
Chestertons’ view: “Despite worries and fears of the impact of the Renters’ Rights Bill on the rental market, so far this year, we are finding that demand and supply of rental properties is either matching 2024 levels or exceeding them,” said Adam Jennings, head of lettings.
