Supply is returning before confidence

The facts: The September RICS survey, published on 8 October, showed the new-buyer-enquiries balance falling to -22%, from -18% in August. Agreed sales slipped to -18%. At the same time, new sales instructions moved to +6% — the first positive reading since mid-2025. The national price balance weakened to -32%, with London notably more negative than the UK figure. These are survey net balances, not percentage changes in prices or activity.

Lloyds reported on 7 October that UK prices were unchanged both monthly and annually in September, at an average of £298,441. Prices were 0.2% lower over the quarter.

Sources: RICS Residential Market Survey, 8 October 2026 and Lloyds House Price Index, 7 October 2026.

Mark’s view: This is not a market running out of property. It is a market running short of conviction.

More instructions should improve choice for buyers, but they also increase the competition facing every seller. A property launched at an aspirational price now arrives beside more alternatives while the buyer pool is becoming more cautious.

Sellers should judge the first fortnight by the quality of engagement: second viewings, document requests and properly funded offers. High portal traffic without those signals is not momentum.

Buyers have more room to compare, but the best houses remain a separate market. More stock overall does not create another wide, turnkey family house on the right street.

The mortgage market is tightening ahead of Bank Rate

The facts: The Bank of England’s Credit Conditions Survey, published on 8 October, showed secured-credit availability falling to a net balance of -15.5 in the three months to the end of August. Availability for borrowers above 75% loan-to-value fell more sharply, to -19.9, while the proportion of household loan applications approved recorded a -10.5 balance. Demand for house-purchase lending fell to -37.1. These are lender survey net balances, not percentage reductions in credit volumes. Lenders expect a modest improvement in both supply and demand during the current quarter.

Moneyfacts reported on 5 October that the average five-year fixed mortgage had reached 6.00%, with the average two-year fix at 5.98%. The number of fixed products below 5% had fallen from almost 1,500 at the beginning of September to nine. These are whole-market averages and product counts, not the rate every borrower will pay.

Money markets on 8 October implied a greater than 80% chance of a Bank of England increase in November, with two quarter-point rises fully priced by February. That is a market expectation, not a certainty.

Sources: Bank of England Credit Conditions Survey, 8 October 2026, Moneyfacts, 5 October 2026 and Reuters, 8 October 2026.

Mark’s view: Bank Rate is still 3.75%, but buyers are already living in the next interest-rate decision.

The mortgage market has repriced before the Monetary Policy Committee has moved. That makes an old agreement in principle increasingly unreliable and turns funding quality into part of the offer itself.

Buyers should secure a product early, understand the lender’s valuation assumptions and keep the option to switch if pricing improves. Sellers should look beyond the offer amount to deposit, loan-to-value, lender, chain and expiry date. A higher bid exposed to a down-valuation is not automatically the better bid.

Budget rumours are moving closer to the mainstream market

The facts: Reuters reported on 7 October that the Chancellor is considering reducing the planned threshold for the High Value Council Tax Surcharge from £2 million to £1.5 million. On current values, that could more than double the number of affected homes to about 271,000. No decision has been announced; the Budget is due on 28 October.

Source: Reuters Budget policy round-up, 7 October 2026.

Mark’s view: The most damaging word in the property market is often “considering”.

A lower threshold would pull the issue beyond trophy homes and into ordinary family-house territory across London. But buyers should not turn an unconfirmed annual charge into an arbitrary six-figure discount, and sellers should not pretend it is irrelevant.

The rational response is to model the possible cost, identify who bears it and keep the negotiation attached to numbers. Tax uncertainty becomes most disruptive when neither side quantifies it.

Prime Central London has improved — selectively

The facts: Knight Frank reported on 2 October that Prime Central London prices rose 0.3% over the quarter, the first quarterly increase for four years. Prices remained 2% lower annually, although that was the smallest yearly decline in 18 months.

Exchanges across prime central and prime outer London in the year to September were 2.5% below the previous year, compared with a 14% decline in March. There were 121 transactions above £10 million — unchanged year-on-year — while total spending in that segment rose 14% to £2.4 billion.

Savills’ prime-market update, published on 8 October, said cash accounted for more than half of prime purchases this year. It also found that London’s more domestic prime markets fell 1.1% in the third quarter, reflecting their greater reliance on mortgage debt.

Sources: Knight Frank Prime London Index, 2 October 2026 and Savills Prime UK Residential, 8 October 2026.

Mark’s view: The PCL improvement is real, but it is not permission to add 5% to every asking price.

In Chelsea, best-in-class houses and genuinely exceptional flats can benefit from returning confidence. Average apartments carrying lease, service-charge or capital-works uncertainty remain exposed.

In Belgravia, buyers may be less mortgage-dependent, but they are highly sensitive to tax, holding costs and global alternatives. Cash removes a lending condition; it does not remove the requirement for value.

In Notting Hill, needs-driven demand still protects the right family house. Width, garden, condition and exact position create scarcity. That resilience should not be transferred automatically to compromised flats or secondary streets.

The lesson is that PCL is recovering through selection. The buyer is rewarding rarity, not postcode alone.

South West London faces the sharpest funding test

The facts: No robust new borough-level sales index for South West London was published this week. The most relevant fresh evidence is Knight Frank’s 0.6% annual fall in prime outer London, Savills’ 1.1% third-quarter fall in domestic prime London markets, and the RICS finding that London’s price balance remains weaker than the national reading.

Mark’s view: This is where tighter mortgage supply meets needs-driven demand most directly.

Across Fulham, Putney, Wandsworth, Clapham and Streatham, families still have reasons to move: schools, another bedroom, a garden and commuting. What has changed is the cost of translating that need into an offer.

Finished houses should outperform because refurbishment must now be financed at more expensive rates. Flats with clear leases, sensible service charges and organised management information will also separate themselves from those asking buyers to price unknown liabilities.

The possible £1.5 million surcharge threshold matters particularly here. It would bring many mainstream South West London family houses into a debate previously associated with Prime Central London. Sellers should prepare for that question; buyers should distinguish a recurring cost from the underlying capital value.

Key takeaway

More choice for buyers does not mean more capacity to buy.

The market is receiving new stock while lenders tighten and mortgage rates rise. That combination gives buyers leverage over replaceable property, but it strengthens the premium attached to genuine scarcity.

For sellers, price and buyer qualification now matter equally. For buyers, financial readiness is what turns greater choice into negotiating power.