UK Macro & Political Environment

SJW Properties — London Residential Property Market Report · Q2 2026

1. Macro Economy — Q2 2026 Overview

Indicator	Q2 2026	Year Earlier	Implication for Property
Bank Rate	3.75%	Lower	Mortgage costs stabilising; improving market confidence
CPI Inflation	c. 2.8%	Lower	Purchasing power gradually improving
UK Unemployment	4.9%	+0.3 ppt	Labour market remains resilient
London Unemployment	6.6%	+0.2 ppt	Above the national average, but broadly stable
London Population	c. 9.1–9.2 million (latest official annual estimate)	Slight increase	Underpins long-term housing demand

2. Political Environment

The second quarter of 2026 brought fresh change to the UK political landscape. According to Reuters, Prime Minister Keir Starmer indicated that he would step down once a new Labour leader is chosen, drawing market attention to the future direction of economic and housing policy. To date, financial markets have remained broadly stable, while the property market has largely adopted a wait-and-see stance, pending further clarity from a new government on tax, housing and economic policy.

Why It Matters for Property Investors

Factor	What it means
Financing Cost	Changes in interest rates directly affect mortgage costs and investment returns.
Market Confidence	Political stability influences international capital inflows and the pace of buyer decision-making.
Exchange Rate	Movements in sterling affect the effective purchase cost for overseas investors.
Policy Outlook	Changes to tax, housing and rental policy affect long-term holding costs and asset allocation.

SJW Market Observation

From SJW’s frontline observation in Q2 2026, most international buyers did not alter their purchase plans in response to short-term political change. They are more focused on whether interest rates are entering a stable range, whether London’s education and international-city advantages will endure, and whether the adjustment phase is bringing forward assets of genuine long-term value. We therefore believe that the core factors shaping the London property market remain financing costs, asset pricing and the expectations of buyers and sellers

— rather than short-term political events in themselves.

Sources: Bank of England · ONS · Gov.uk · HM Treasury · Reuters · BBC News