London’s property market is bracing for the sharpest decline in house prices across the UK in the coming months, property agents predict, as the capital grapples with a toxic mix of economic jitters and tax hikes.
The Royal Institution of Chartered Surveyors (RICS) has reported a slump in new buyer enquiries nationwide, hitting the lowest point since November 2023, alongside a drop in agreed sales in February. But the capital is feeling the pinch hardest, with transactions and demand plummeting more than in any other region.
William Delaney, a property consultant at Coopers of London, pins the malaise on shaky confidence.
“Sales are sluggish with low confidence caused by uncertain political and economic forecasts,” he told RICS. “The usual imperatives that motivate a decision to purchase (growing family, better school catchment area, transport facilities etc) often do not apply in central London. Buyers want stability and confidence.”
The fading rush to beat the April expiry of stamp duty relief isn’t helping either—RICS notes the average five-month homebuying timeline leaves late starters little hope of dodging the deadline.
Simon Rubinson, RICS chief economist, sees a market losing steam.
“The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches,” he said. “Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment.”
With the Bank of England holding firm on borrowing rates and cost-of-living pressures biting—think soaring food, energy, and rent bills—saving for a deposit is tougher than ever.
The stakes are high for London’s first-time buyers, who face a sting of over £11,000 in extra stamp duty costs if they miss the threshold cut-off, per Rightmove’s calculations.
Chancellor Rachel Reeves has added to the gloom, warning that US President Donald Trump’s tariffs could fan inflation and choke growth.
Recent data backs the grim outlook: Halifax reported London house prices took their biggest tumble since 2023 in February, while official figures show a near 3% real-terms value drop over the past year.
As tax burdens, borrowing costs, and affordability woes pile on, London’s housing market looks set for a rocky ride.