London Property Market Analysis: March 2026

1. Mortgage Rates: Bank of England held at 4.25%. No cut.

• •Bank of England held at 4.25% in March. No cut.^[2] The Monetary Policy Committee cited wage growth at 5.8% annualised and consumer price inflation above the 2% target. Fourth cut since August 2024, from 5.25%. The pace has stalled.
• •Iran conflict adds inflation risk.^[4] Oil above $85 feeds into energy costs and consumer price inflation. If sustained through Q2, the Bank of England's trajectory shifts and the cutting cycle stalls further.
• •2yr fixed (IUMBV34): 4.37%. 5yr fixed (IUMBV42): 4.21%.^[2] Down from August 2023 peaks of 5.82% and 5.35%. But 4.37% remains 2.5 percentage points above 2020–2021 levels, where most buyers anchored their affordability expectations.

2. For Buyers: activity recovering, but concentrated in outer east London

• •68,100 national mortgage approvals in December 2025, the highest since June 2022.^[5] Buyer activity is recovering off the 2023 floor as rates fall from their peak. The direction has changed.
• •The recovery is geographically narrow. Barking & Dagenham (£297,000), Havering (£382,000), and Bexley (£368,000) are posting positive YoY price growth.^[1] These are the only boroughs where two incomes at median wages can reach the entry price. 74% of London first-time buyers now buy jointly.^[5]
• •Inner and central London buyer pools have not come back. The monthly repayment on a £420,000 mortgage at 4.37% is £2,304,^[2] down £413 from the 2023 peak but roughly £500 above pre-2022 levels. That gap is keeping demand thin outside outer east.

3. For Sellers: flats are losing ground to houses and the gap is widening

• •Flat median sits at £384,000. Terraced houses at £558,000.^[1] The gap has widened through 2025 as leasehold and service charge costs weigh on flat demand. Sellers pricing flats at 2022 levels are not moving.
• •Prime central is sliding faster. Kensington & Chelsea down 3.1% year-on-year at £1,420,000; Westminster down 1.8% at £871,000; City of London down 2.4% at £762,000.^[1] The buyer pool above £700,000 has not recovered since 2022 and transaction volumes in these markets remain thin.
• •Overall transaction volumes are still declining year-on-year but the rate of decline is narrowing.^[1] October and November 2025 are the months with complete registration data. Both show improvement versus the same months in 2024.

4. Outlook: Iran conflict is the primary risk to the cutting cycle

• •Iran conflict is the primary risk to the trajectory. UK consumer price inflation was stalling above target before the latest escalation.^[4] Oil above $85 sustained through summer gives the Monetary Policy Committee reason to hold. Swap markets had priced in two further cuts before December 2026. That pricing has shifted since the March hold.
• •New build completions in London fell 6.3% in 2025.^[6] A shrinking pipeline alongside recovering demand provides a price floor in outer boroughs where planning approvals have lagged population growth.

References

1. HM Land Registry. Price Paid Data. BrickIntel analysis, category A transactions only.
2. Bank of England. Statistical Interactive Database. Series IUDBEDR (base rate), IUMBV34 (2yr fixed 75% LTV), IUMBV42 (5yr fixed). March 2026.
3. ONS. Annual Survey of Hours and Earnings (ASHE). 2024. Median full-time earnings, London.
4. ONS. Consumer Prices Index. February 2026.
5. UK Finance. Mortgage lending statistics. December 2025.
6. ONS. Construction output and new build completions. 2025.