Luxury London Property Sales Soar Despite Overall Market Downturn

Sales of properties in London’s prime neighbourhoods experienced a downturn last month, largely attributed to the UK government's budget causing a temporary pause in transactions. According to figures from property data firm LonRes, October saw a 17.5 per cent decrease in sales transactions compared to the previous year. This also represented a 6.6 per cent drop from the October average recorded in the pre-pandemic years of 2017-2019, marking the lowest sales volume for any October since 2018. Prime London analysis typically encompasses properties primarily located in central London.

Properties that did manage to sell were often at prices below their initial asking. Price reductions saw an 8.5 per cent increase from an already elevated level, with approximately half of all properties on the market having their prices reduced at least once. However, a notable exception to this trend was observed in transactions involving properties valued at over £5 million, which actually increased by 13.6 per cent.

New listings for properties in the £5 million-plus bracket rose by 1.5 per cent, while the total number of available homes in this high-value segment decreased by 2.3 per cent compared to the previous year. LonRes noted that monthly data for the £5 million-plus market can be volatile, and has been significantly influenced by speculation surrounding tax and policy changes over the past 18 months. Chancellor John Healey’s budget was generally perceived as relatively benign for the property market. Nevertheless, concerns had been circulating regarding potential changes to capital gains tax, a further tightening of the incoming mansion tax, or the introduction of a wealth tax.

October typically represents a peak period for offers and agreed deals, especially for newly listed or post-summer relaunched properties. However, this year deviated from that pattern, with a 21.3 per cent decrease in properties reported as 'under offer' in October, making it the first month of the year with fewer properties under offer than the pre-pandemic average.

Across London, average sale prices declined by 6.6 per cent year-on-year and were down 9.4 per cent compared to the 2017-2019 period. After reaching a peak in September 2025, the number of homes on the market saw a dip in the first half of 2026, followed by a rise in recent months before a 1.3 per cent decrease in October. In contrast, average rental prices increased by 5 per cent.

Nick Gregori, head of research at LonRes, commented, “With the budget released towards the end of the month, October was relatively subdued for the prime property markets as they awaited potential surprises. The reaction to the Chancellor’s announcements – concerning property and broader economic matters – could perhaps be best summarized as: 'Was that it?' We will need to examine data from November and subsequent months to ascertain if potential buyers and sellers felt reassured by the absence of significant changes. It is possible that some pent-up demand may be released as deals previously postponed are finally completed.”

Mr. Gregori also suggested that the political shift in the US, where Democrats gained control of both chambers of Congress, driven by cost of living concerns, might have a more substantial impact than domestic policy changes. This comes despite the Bank of England increasing interest rates for the first time in three years, citing expectations of inflation rising to approximately 5 per cent next summer due to sustained higher energy costs. “While this development is negative for market sentiment, it is not anticipated to materially affect mortgage costs, as this had already been factored in by lenders,” Mr. Gregori added.