London has become the hardest city to sell a home

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01-05-2025

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For decades, London homeowners couldn't believe their luck as their investments snowballed in value. Everybody wanted a piece of the London property market and sellers had the power to dictate ever-higher prices.
Between 1995 and 2015, the average price of a home in London leapt from £79,000 to £480,000, a 500pc increase, according to Land Registry data. Over the same period, the S&P 500 index – which measures the performance of large American stocks – increased by 160pc. During this golden age for house prices, even the most shrewd investors that managed to consistently outperform the stock market could have only dreamed of these kinds of returns.
Today, the picture looks very different. Of the 10 hardest postcodes to sell a house in, eight are in London, according to property analytics firm TwentyCi. Regionally, the South East edges London as the toughest to sell a house in, while Scotland ranked as the easiest.
The firm used five criteria to rank how difficult it was to sell a property, such as the final sale price compared with the original asking price, how likely properties were to sell and how quickly they sold.
So how did London go from a safe haven for property investors to overwhelmingly a buyers' market?
In terms of house prices, London has struggled immensely in recent years. The average price of a flat has not risen in a decade according to Zoopla data and a period of high inflation means that it has actually fallen by around a quarter in real terms.
In the prime market – meaning properties worth around £1m or more – the reality is even more grim. Across prime central London, property prices have fallen 21pc from their peak a decade ago, or 42pc in real terms, according to data from estate agency Savills.
This means that London's market was starting from an overinflated position in 2015, explains Richard Donnell, the chief executive of property portal Zoopla.
'There was a huge inflow of Europeans coming to London to work, mortgage rates were low, the economy was on fire. Between 2014 and 2015, house price inflation was 20pc. Now that interest rates are much higher, the market is adjusting to that.'
As a global city with an expensive property market, London has been particularly vulnerable to a succession of major events, Mr Donnell adds.
'It has been very volatile over the last 10 years. The Brexit vote hit London really hard in 2016, as there were lots of Europeans coming here to work, and caused a lot of uncertainty among some buyers. Then there was a pandemic, which hit London especially hard and closed the market down, followed by unsustainable levels of demand, which saw prices spike.
'More recently we have had higher interest rates, which has stopped a lot of people from moving – first after Liz Truss' infamous mini-Budget, then 2023. Higher mortgage rates hit harder where house prices are also much higher. You need a much bigger deposit and salary to be able to buy.
'London's economy is slowly being redefined – a lot of banks are relocating jobs overseas. The cool Britannia days are behind us.'
Following a decade of turbulence, current conditions and fears of a recession are doing little to inspire confidence in buyers, explains one West Hampstead estate agent, who does not wish to be named.
'The week Trump brought in the tariffs, the market went really quiet. People need a bit of confidence – they're worried about moving.
'It's definitely a buyers' market, and it's quietened down a lot recently. Just after Christmas it got really busy with people trying to get in before the stamp duty hike, but it had started to tail off before that.
'We're seeing a lot of properties sell below the asking price, with discounts of between 3pc and 5pc. The uncertainty is a really big thing. People think interest rates are going to come down later this year and they're holding out for that. A house is the most expensive thing they're ever going to buy – do they want to do that in these conditions?'
Interest rates having remained stubbornly high since 2022 does not just affect mortgage-backed buyers, adds Stuart Bailey, the head of London super-prime sales at estate agent Knight Frank.
'Cash buyers' sentiment and strategy is affected by mortgage interest rates. If they are sat in cash thinking that other buyers are waiting for rates to fall, they're going to try and negotiate a lower price themselves.'
Tougher conditions for landlords has also been pushing them to market, congesting the supply and increasing competition for sellers. Rental yields are also higher further afield, with landlords in northern cities such as Manchester and Newcastle netting annual returns of more than 6pc compared to less than 4pc in London, according to analysis of government data by software provider Cohab.
This makes other cities much more attractive for buy-to-let customers, as well as making existing London landlords frustrated by low yields.
'One in eight of our listings is a formerly rented property, so there's also an undercurrent of landlords selling – though the bulk of that has already happened,' adds Mr Donnell.
By changing the non-dom scheme and raising capital gains tax, the Government is driving prime customers away from the capital, says Mr Bailey.
'Historically, we have had an affinity with a lot of Americans and people from the Middle East. There has been a boringness and a stability about London, a sense that it is a safe haven.
'But that is dissipating – wealth is leaving the UK. From my perspective on the shop floor, I'm seeing wealthy, mostly self-made people who are buyers leaving the UK or talking about it. So the Government has to be careful.'
Nonetheless, Mr Bailey remains optimistic.
'London is still attractive – some people go, some people come. The prime market hasn't been great, but a 20pc fall over a decade isn't a crash. We're now sitting at a low ebb, a flatlining moment, where many people think it might be a good time to buy,' adds Mr Bailey.
'Interest rates are still a bit high and they should be coming down a bit more. We want to see affordability ease up, interest rates fall and then prices can go up again – and the shoe shifts from the buyer to the seller.'
But for now, sellers should continue to be realistic about the value of their homes in order to achieve a sale, says Mr Donnell.
'The buyers' market is keeping people honest – sellers are not pushing prices as much as they used to. They've got to be much more honest about what the value of their property is.'
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