London Home Sellers Slash Prices to Offset Stamp Duty Shock

16 June 2025

Hollie Adams/Bloomberg via Getty Images

London’s property market confronts mounting pressure as stall‑out tax policy and a surge in listings force homeowners to cut asking prices. According to data released today by Rightmove, average property prices in the capital declined approximately 0.9 percent in June, reaching £695,414 a sharper correction than the 0.3 percent drop across the UK as sellers grappled with diminished buyer appetite following April’s stamp duty reboot.

The end of England and Northern Ireland’s temporary stamp duty holiday in April imposed thousands of pounds in additional costs for many buyers. The stamp duty threshold, previously raised for first-time buyers and properties under £425,000, reverted to £300,000, erasing a previously effective financial incentive. Analysts attribute a notable lag in sales cycles; while listing numbers continue to swell, buyer demand has not kept pace, resulting in increased property price sensitivity.

June’s slip marks the largest decline ever recorded for the month by Rightmove, as sellers lowered prices by an average £1,277 unprecedented in recent summer market norms, where a modest 0.4 percent price rise is typical.

In London, the decline reached its greatest severity, down 0.9 percent, while the South East and South West fell 1 percent and 1.6 percent respectively. Still, stronger areas such as parts of southern England experienced modest resilience; despite the drop, average home values remain approximately 0.8 percent above June 2024 levels.

The confluence of renewed property tax and surging supply has created an unusual landscape. Year‑on‑year listings in June rose 11  percent, while buyer enquiries were up only 3  percent resulting in the highest available stock in a decade.

Seeking to attract buyers hit by increased entry costs, sellers face little choice but to adjust pricing downward. Colleen Babcock, property expert at Rightmove, noted that agents frequently urge competitive pricing as the most effective way to stand out in a crowded and jittery market.

The scale of reductions extends beyond average-market homes into the premium sector. Bloomberg reports that London sellers in June offered average price cuts nearing £7,000, aiming to attract buyers newly cautious following the tax restoration.

High-end areas more dependent on foreign wealth, such as central London districts, are also seeing activity decline. Previously aggressive investors remain sidelined amid persistent economic and geopolitical headwinds.

Yet market activity has not come to a full halt. Separate figures from Bloomberg suggest that, despite the drag of tax changes, UK home sales in May hit three‑year highs, aided by buyers rushing to meet deadlines before April’s tax adjustments took hold.

However, momentum has since cooled. Hamptons reports that rental market demand is also softening prospective tenants registering in May are down 17 percent compared to the same period last year

What does this mean for buyers, sellers, and investors? In the short term, sellers are in control of much of the narrative. With so many new listings available, buyers especially first‑time purchasers are negotiating more aggressively. Purchases targeting more modestly priced properties remain the most resilient segment, while premium listings linger unsold or face deeper markdowns .

On the policy front, domestic buyers once priced out of central London are capitalizing on tax-driven bargains. Wealthy non‑UK domiciled purchasers, who previously dominated London’s top‑end market, have significantly retreated in response to large inheritance tax liabilities and reduced relief on overseas income, prompting institutions like Knight Frank to document a steep decline in prime property demand

Looking ahead, interest rates may affect sentiment. The Bank of England recently paused at 4.25 percent following successive rate cuts, but more easing may lie ahead if broader economic growth falters . Any further reductions in borrowing costs could prompt modest resurgence in demand especially among mortgage‑dependent middle‑market buyers .

Longer term, structural factors such as high property transaction taxes, supply shortages, and buyer migration patterns might limit sustained market recovery. Advocates are calling for comprehensive tax reform such as Stamp Duty Land Tax consolidation to reduce downtime and enable smoother market function, but government commitment to such measures remains uncertain .

As the property market adapts, buyers stand to benefit from increased negotiating power and transparent pricing. Sellers seeking urgency in a priced‑sensitive environment are finding that bold pricing strategies can unlock deals. Investors with flexible timelines may capitalize on both rental yield potential, given rising tenant scarcity, and equity gains as market equilibrium stabilizes.

London’s real estate market rarely moves in straight lines. Today’s price cuts reflect a reactive reset as entry costs and overloaded inventory reshape dynamics. The market’s resilience, however, will depend on how soon policy adjustments and interest‑rate trends support meaningful recovery. For now, buyers are in control, sellers are resetting expectations, and the industry is watching closely.