Following a period of mild stagnation in the property market in the months leading up to November’s Budget, after much scaremongering and kite flying by the Government, we are quietly optimistic about the London market in 2026. With inflation and interest rates steadily dropping and market sentiment improving (transactions were up 5.6% in the weeks following the Budget compared to the same period in 2024, according to LonRes), we would argue that now is the time to buy!
The key to success in last year’s market was the three Ps. Our proven formula of expert Pricing advice, strategic Placement and standout Presentation delivered excellent results for us as an agency when we could see many listings on the portals go stale. Our conversion rate was higher than our competitors and we have grown as a business.
This year, our mantra is simple – Be Seen (through targeted multi-channel marketing, Be Sensible (price properly and be patient) and Be Successful (there are buyers out there, and positivity in the market is building).
Going into this new year, all agents should have a spring in their step. The Budget held few surprises - we expected the “Mansion Tax” to be more punitive, and both that and increased taxation on landlords are still a way off. The big positive is that there was no Budget “black hole” as we were advised, and we should now actually have a significant surplus.
So, the economy is in better health than previous reports from the Treasury indicted with inflation predicted to fall further and interest rates expected to come down to between 3%-3.5% by the end of the year.
We believe that buyers will now become more active and look to take action before the absolute bottom of the market is called - it’s difficult to envision pricing coming down any further in central London with so few forced sellers remaining. Furthermore, the mortgage rates have already factored in the expected cuts to the BOE base rate, so buyers are best advised to start their application now.
Impact of the Renters' Rights Act
The one concern is that, with the Renters Rights Act due to come into law in May, there might be a number of landlords who try to sell in the first quarter of the year. This will increase supply, potentially at distorted prices, which could confuse a market recovery.
However, with so few forced landlord sellers, we expect that to be very short-lived. We would argue that there is little reason to sell now if you are a landlord, unless you are one of the landlords who bought in the 90s when buy-to-let was incentivised, and you are now cashing in for your retirement.
For all others, we are at the bottom of the cycle, and a professional lettings agency can help you cope with the Renters Rights Act while you wait for your asset to appreciate again.
With the end of fixed-term tenancies, whilst tenants are being given more flexibility, if a property is well-maintained, well-managed and well prepared for the start of a tenancy, then we expect tenancies to trend longer because of the absence of finite terms or renewal negotiations, whilst rental values are still expected to grow at a healthy level.
It is an excellent time to be a buyer. Prices in central London are nearly 30% lower than they were in 2016, and in real terms, taking inflation into account, affordability is in line with 2012.
So, with a positive but vigilant approach, we’re looking forward to a more stable market and a return to the halcyon days where London was viewed as one of the world's best places to live. One thing for sure is that the history, heritage and cultural flavour of our capital city will always be a draw, and the hope is that external factors will now be less of a barrier.
