After several years of disruption, uncertainty and subdued activity, the London property market is heading into 2026 with cautious optimism.
At Winkworth, we’re seeing early signs that confidence is beginning to return—driven by improving affordability, easing political uncertainty and a growing sense that the market is finding its footing once again.
While challenges remain, particularly around supply and affordability, the year ahead looks set to be steadier and more recognisable than the one Londoners have just endured.
A market coming off historic lows
London’s housing market has been through one of its toughest periods in decades. Transaction levels in 2024 fell to their lowest point in more than 20 years, and early indications suggest 2025 will end at a similarly muted level. Political uncertainty around the 2024 general election and prolonged speculation ahead of the Autumn Budget caused many buyers and sellers to pause, creating a backlog of suppressed demand.
Fewer transactions don’t just affect movers—they ripple through the wider economy, impacting everything from home improvement and removals to stamp duty receipts. London has averaged around 92,500 transactions per year over the past decade, already down on previous norms, and the cumulative effect of reduced activity has been significant.
Why 2026 could feel different
Looking ahead, there are growing reasons to believe that 2026 will bring greater stability.
- Affordability is improving: Wage growth has outpaced house price growth, and London prices are now over 5% below their 2022 peak. This has quietly reset expectations and created more realistic entry points for buyers.
- Interest rates are easing: With inflation appearing to have peaked, further base rate cuts are expected through the year, gradually improving mortgage affordability and buyer confidence.
- Pent-up demand is re-emerging: Many agents—including Winkworth offices across the capital—have reported a noticeable uptick in offers and enquiries following the Budget, as uncertainty has finally lifted.
While few expect a sudden surge, the prevailing view is that demand will return steadily rather than dramatically.
Price growth: modest, not explosive
House price growth forecasts for London in 2026 remain conservative. Most commentators expect values to be broadly flat or rise modestly—typically between 0% and 3%. This reflects a healthier balance between buyers and sellers, rather than the volatility seen in recent years.
From our perspective, this kind of environment can actually support market confidence. Stable pricing allows buyers to plan with greater certainty and gives sellers realistic benchmarks, helping transactions to progress more smoothly.
New homes: still the missing piece
Despite some policy shifts aimed at encouraging development, the shortage of new homes remains London’s biggest structural challenge. Measures to relax affordable housing requirements and promote building around transport hubs may help in the short term, but supply is unlikely to catch up with demand in 2026.
This ongoing imbalance is one reason affordability will remain stretched—and why well-located, well-presented homes are likely to continue attracting strong interest, even in a steadier market.
Where buyers may find value
As ever, value in London is highly localised. Many buyers are reassessing priorities—trading ultracentral locations for more space, stronger community feel and better long-term liveability.
We’re continuing to see activity in so-called “urban villages” across the outer zones, where family homes offer better relative value and good transport links. Relocation within London—from traditionally expensive areas to emerging neighbourhoods—remains a well-trodden path, particularly for upsizers.
Will the mansion tax change behaviour?
The introduction of a new annual levy on higher-value homes from 2028 has understandably attracted attention. While the long-term impact remains uncertain, there is a growing sense that it may encourage some owners—particularly long-standing homeowners—to bring forward downsizing decisions rather than delay them.
Rather than suppressing activity, this could actually increase supply in certain prime areas over the coming years.
The outlook from Winkworth
At Winkworth, our view is that 2026 is unlikely to be a boom year—but it could mark a welcome return to a more balanced, functional London property market. With greater clarity on policy, improving affordability and a release of pent-up demand, conditions are aligning for a gradual recovery in confidence and activity.
For buyers, the coming year may offer opportunity without the intense competition of past cycles. For sellers, realism on pricing and presentation will be key—but the market is moving again.
If you’re planning a move in 2026, our teams across London are well placed to help you navigate what promises to be a more settled, more navigable year ahead.
Source: Standard and JLL
