The luxury residential market in London remained under pressure in July as high levels of supply contrasted with minimal transaction activity, LonRes has reported.

In the high-end market, particularly properties worth over £5m, transactions fell by 13.3% compared to last year, although activity remained 11.4% higher than its pre-pandemic average.

New instructions in the sector rose 28.2% year-on-year (YoY) and stock levels climbed by 23.4% annually, reaching 87.1% more than July 2020.

Nick Gregori, head of research at LonRes, said: “The £5m-plus market continues to broadly follow the same pattern as the rest of the market: high supply, lots of price reductions, but reasonable levels of demand. Stock on the market remained close to its record high.

“At the very top end, July saw a number of £15m-plus exchanges, a vote of confidence for London as a destination for high net worth buyers.”

Overall transactions in the wider prime London market also declined by 31.7% YoY and 7.8% below the 2017-2019 average, despite more homes going under offer.

According to the data, deals have been taking longer to close or are collapsing amid weaker buyer confidence, with fall-throughs up 19.9% YoY and 48% above pre-pandemic levels.

Supply has also jumped, with fresh instructions growing by 22.4% compared to July 2024 and total stock expanding by 15.8% annually.

Price reductions have surged by almost 60% since last year as sellers adjusted to lower demand.

Nevertheless, average prices slipped only marginally by 0.4% YoY and 8% below pre-pandemic averages.

The research showed rental supply at a four year high, as new instructions increased by 7.7% annually, while lets agreed decreased.

Annual rental growth slowed to 3.3% in July, down from 5.4% in June, but rents remained 34.8% higher than pre-pandemic levels.

Gregori added: “A quiet summer market is traditionally the time to take stock in anticipation of a busy autumn. Unfortunately, this year, any positive sentiment could be outweighed by another extended build up to the Budget, with fears about tax rises and a £40b-plus hole in government finances dominating the agenda.

“On a happier economic note, UK GDP grew faster than expected in Q2 and there was another cut to the base rate, which should feed through into better mortgage rates for buyers.”