London Property Market Analysis: March 2026

1. Mortgage Rates: Bank of England held at 3.75%. No cut.

• •Bank of England held at 3.75% in March, no cut: the Monetary Policy Committee cited rising energy prices driven by the Iran conflict and consumer price inflation expected to run at 3–3.5% over the next two quarters.^[2] The sixth cut since August 2024, reducing from 5.25%, came in December 2025. Since then, the pace has stalled.
• •Oil above $85 adds inflation pressure: if that pressure holds through the second quarter of 2026, the Bank of England has reason to hold for longer.^[3]
• •2-year fixed at 3.97%, 5-year at 4.01%: both down from July 2023 peaks of 6.22% and 5.71%.^[2] At 3.97%, the 2-year rate still sits approximately 2.5 percentage points above 2020–2021 levels, where most buyers anchored their affordability expectations.

2. For Buyers: outer east the only active market

• •Outer east holds up as the most accessible market: Barking & Dagenham (£380,000, +3.7% year-on-year), Havering (£445,000, +0.6%), and Bexley (£425,000, -0.5%) are the most accessible entry points for buyers at combined median London wages and have held value better than central boroughs.^[1]
• •Central London demand has not recovered: the monthly repayment on a £420,000 mortgage at 3.97% is £2,206,^[2] down approximately £556 from the July 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 £420,000 (November 2025) against £565,000 for terraced houses: a gap that has widened through 2025 as leasehold and service charge costs weigh on flat demand.^[1] Sellers pricing flats at 2022 levels are not moving.
• •Prime central London sliding faster: Kensington & Chelsea median is £1,344,149 (down 20.8% year-on-year), Westminster £1,050,000 (down 9.1%), and the City of London £735,000 (down 3.3%), comparing May 2025–January 2026 against the same period a year prior.^[1] The prior-year window includes the stamp duty rush, which inflates the comparison base — but even allowing for that, transaction volumes in these markets remain well below 2022 levels and the buyer pool above £700,000 has not recovered.
• •October and November 2025 volumes down sharply on 2024: 4,530 versus 8,848 in October, 3,897 versus 7,501 in November.^[1] The comparison is distorted by the stamp duty deadline in April 2025, which pulled large numbers of completions forward into early 2025 at scale: March 2025 alone registered 14,647 sales. Since then, monthly volumes have settled around 4,000 to 6,000, below the elevated 2024 benchmark but broadly stable since May 2025.

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

• •Iran conflict is the primary risk to the cutting cycle: consumer price inflation was already stalling above target before the latest escalation,^[3] and with oil above $85 sustained through summer 2026, the Monetary Policy Committee has reason to hold. Swap markets had priced in two further cuts before December 2026, and that pricing has shifted since the March decision.
• •New build completions fell 8% in 2025: with planning approvals lagging population growth in outer boroughs, a shrinking pipeline alongside stabilising demand provides a price floor where it is most needed.^[4]

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. Consumer Prices Index. January 2026. CPI 3.0% in the 12 months to January 2026.
4. MHCLG. Indicators of house building, UK: permanent dwellings started and completed by country. November 2025.