Prime London sales activity weakened in July while annual rental growth accelerated to its highest level since February 2025, according to LonRes.

Average achieved sale prices fell by 7.9% compared with July last year and were 5.7% below their 2017 to 2019 average, the property analyst’s data showed.

Transactions were down 11.5% annually and 7.3% against the pre-pandemic July average. The number of properties going under offer fell by 14.8% year on year, although it remained 35% above the 2017 to 2019 average.

LonRes said the proportion of agreed deals progressing to exchange remained significantly below historical levels.

New sales instructions increased by 3.3% annually and were 26.2% above the pre-pandemic average. The stock of homes for sale at the end of July was 2.5% higher than a year earlier, but 1.6% below the peak recorded in September 2025.

More than half of the properties sold during July had undergone at least one asking-price reduction. The average discount to asking price across prime London stood at 10.4%.

Homes sold within three months during 2026 achieved an average discount of 3.9%, compared with 19.3% for those taking more than 12 months to sell.

SUPER-PRIME MARKET LOSES MOMENTUM

Activity also slowed in the £5 million-plus market. Transactions fell by 20% year on year in July, while new instructions declined by 30.3%.

Despite the annual fall, transactions were 20% above the 2017 to 2019 July average and new instructions were 30.1% higher.

The number of £5 million-plus homes under offer dropped by 50% compared with July last year. Available stock at the end of the month was 5.2% lower annually but 61.8% higher than in July 2021.

Nick Gregori, head of research at LonRes, said: “July typically signals the start of a summer slowdown for the prime London sales market, but July 2026 saw low activity even for the time of year.

“Adding a new prime minister and continuing global uncertainty to the mix has resulted in a subdued prime London market, with the super prime segment particularly affected.

“This is a case of the data finally catching up with agent sentiment, as their feedback has been more negative than some market metrics would suggest for a number of months.

“The key indicator is simply the number of transactions relative to new instructions, under offers and existing stock – it remains stubbornly low. Uncertainty and a lack of urgency, driven in part by low expectations of future price growth, continue to hinder any potential recovery.”

PRIME RENTS RISE BY 5.3%

Average rents across prime London increased by 5.3% in the year to July, the strongest growth recorded in 18 months. Rental values were 41% above their 2017 to 2019 average.

Lets agreed rose by 1.5% annually and new instructions increased by 3.6%. The number of available rental properties was 6.8% higher than a year earlier.

The lettings activity figures exclude prime fringe postcodes because of a change in the way listings are collected for LonRes’s rental checker service.

Prime central London recorded annual rental growth of 5.7% in July, having registered a 3.7% fall in February.

LonRes said the acceleration in rents had coincided with the Renters’ Rights Act coming into force in May. However, it noted that more than 20% of prime central London properties recorded in 2026 were exempt because their annual rent exceeded £100,000, suggesting other factors were also influencing the market.

Gregori said: “In the prime London lettings market, there is a growing weight of evidence that the Renters’ Rights Act has put upward pressure on rents.

“Last month we noted that two months wasn’t enough of a trend and, while three might not be either, there was a marked acceleration in rental growth in July so it’s becoming harder to ignore the argument.

“However, the strong performance of the PCL market, where a significant minority of properties are excluded from the Act due to annual rents of over £100,000 per year, raises questions about what other factors are in play.

“It is possible there is some impact from Middle East expat returnees, plus people choosing to rent not buy due to lack of confidence in the sales market.”