Homeowners across the capital are being forced to drop asking prices as the number of properties up for sale continues to climb.

New data from property experts LonRes has revealed that house prices in upmarket areas of London fell by 2.8% in May compared to last year. This means prices are now roughly the same as they were before the pandemic (+0.7%).

The number of homes being put up for sale in May was a whopping 12.1% higher than the same time last year, as more people decided to test the market. This has led to a surge in the number of properties up for grabs, with 12.2% more homes on the market compared to a year ago. Estate agents say that this is a staggering 26.1% higher than five years ago.

Buyers spoiled for choice in Kensington and Fulham

The areas seeing the biggest jumps in the number of homes being put up for sale include Fulham & Earls Court and Knightsbridge & Belgravia.

With more choice available, buyers are in a strong position, and sellers are having to make their properties more tempting. Almost half (48%) of homes in prime London areas have had their asking prices slashed before finding a buyer. In South Kensington, a massive 60% of homes sold had to have their prices reduced.

Price cuts are back, but is it good news for buyers?

The increase in price reductions suggests that the prime London property market is finally returning to a more normal state after the pandemic frenzy.

Nick Gregori, head of research at LonRes, said: “Demand for homes is still out there but is tending to be price sensitive. Motivated vendors understand this and we are seeing asking prices being reduced in greater numbers than usual.”

Even luxury homes are seeing price cuts

Even the top end of the market is not immune to the slowdown. Sales of homes worth £5 million or more plummeted by 20.5% in May compared to last year.

This drop comes as the number of luxury homes coming onto the market has increased, giving wealthy buyers more options to choose from.

What does this mean for buyers and sellers?

For sellers:

• It’s now even more crucial to price your property realistically.
• You need to make your home stand out from the crowd.
• Be prepared to negotiate with buyers.

For buyers:

• There are now more homes to choose from.
• You’re in a strong position to negotiate a good deal.
• Be patient and take your time to find the right property.

What about the rental market?

It’s not just homeowners feeling the pinch. Rent increases in London are also slowing down, offering some relief to tenants.

The latest data shows that rents rose by just 1.1% in May, the weakest growth since August 2021. However, rents are still a huge 28.3% higher than they were before the pandemic.

While rents may be easing, actually finding a rental property in the capital remains incredibly tough.

Mr Gregori said: “Lettings activity is increasing slowly, up around 10% so far this year compared to 2023.”