1. Central London price falls ease, despite continued buyer caution
2. Domestic outer London markets remain resilient
3. December recovery in activity levels likely to continue this year
4. Looking ahead for 2026 — more stability for prime prices

Price falls across prime central London eased in the final quarter of last year in the wake of a better-than-expected Autumn Budget. They fell by -0.9%, half the level seen in Q3, and leave values down a total of -4.8% during 2025.

The most discretionary markets, those above £10 million, fell by a more significant -5.6% as rumours surrounding a harsher mansion tax impacted sentiment. But more domestic areas, like Marylebone and Notting Hill, held up strongest during both the final quarter and throughout 2025.

Despite a greater level of certainty, demand remains relatively limited with fewer prospective buyers since the end of the non-dom regime. This means properties across prime central London have now lost a quarter of their value since the peak of 2014.

For London’s more domestic outer prime markets, values fell by just -0.2% during Q4, leaving them -1.3% lower than at the start of the year.

In particular, prices across South West and West London fell marginally on an annual basis, as needs-based movers remained more active and the announcement of the High Value Council Tax Surcharge was better than feared. Similarly, house prices have held up better than those for flats, with annual price falls of just -0.6%.

These markets have also been supported by falling mortgage rates resulting from four Bank base rate cuts throughout last year.

Although much of the Budget’s impact on prices had already been factored in after the summer’s rumours, price sensitivity remains, and it will likely still take some time for the tax changes to be fully absorbed by the market.

Top end activity levels across the capital were also impacted in the lead-up to the Budget. But December net agreed sales above £1 million recovered to within 3% of the levels seen in December 2024, according to data from TwentyCi.

A 19% rise in new instructions also indicates refreshed confidence from sellers, which is likely to carry forward into this year.

Throughout 2025, there were -6% fewer net agreed sales above £1 million than during 2024. At the same time, there were 15% more price changes to marketed properties, highlighting the price-sensitive nature of London’s market last year.

Our December buyer and seller survey suggests that sentiment improved significantly; however, some caution remains, particularly among more discretionary second-home and investment purchasers.

Following the announcement of the High Value Council Tax Surcharge and the reduced likelihood of any further changes to the property tax system, we expect more stability for prime property prices this year. Coupled with a relatively stable mortgage market and the expectation of further Bank base rate cuts, activity levels are also likely to be less volatile, with buyers and sellers planning accordingly now that they have more confidence.

In light of ongoing economic uncertainty and the likelihood that the new property tax thresholds will take some time to become embedded, short-term prospects for price growth are muted.

In central London specifically, while properties continue to offer value from both a historical and global perspective, demand levels are likely to stay relatively subdued and we expect a gradual recovery, as opposed to a significant bounce in values.

Read more about our latest five-year prime forecasts here.

Prime London forecasts for 2026–2030