London House Prices: Is The Capital's Property Boom Over?

London's property market has long been a favourite for investors, thanks to its strong demand and potential for long-term growth. Land Registry data shows that average capital house prices surged by 569% between 1990 and 2022. More recently, however, the trend has reversed. Between June 2025 and June 2026, average prices dropped by over 2%, falling from £568,050 to £553,870.

Zoopla research reveals that almost all London home buyers (99%) pay stamp duty, compared to just 63% in the North East. Richard Donnell, executive director at Zoopla, notes that high moving costs can deter people from moving altogether. Additionally, international tensions and domestic political uncertainty are further cooling the market.

Could London’s fortunes change any time soon and will it continue to attract buyers and property investors?

Premium market house prices plummet

London's most expensive neighbourhoods are seeing a sharp downturn. Between June 2025 and June 2026, average prices fell by 25% in Westminster, 20% in the City of London and 14% in Kensington and Chelsea.

Stuart Bailey of Knight Frank notes that the market is now split. Buyers are only interested in best-in-class homes, which are properties that are perfectly renovated and in top locations. Owners of properties that need work or are less well-positioned are having to slash prices to find buyers, dragging down overall averages.

What are estate agents and surveyors saying?

The latest RICS survey reveals mixed sentiment among professionals. While one agent noted a slight uptick in recent activity, they warned that a high number of available properties is keeping buyers cautious. Others reported a quiet summer, with economic and political uncertainty weighing on buyer confidence.

Overall, the market is described as flat with downward pressure continuing as sellers struggle to secure buyers. Although having unique additions to the home, from full extensions to high-quality photo prints can increase property value.

Will London house prices rise in 2026?

Don't expect significant growth in London house prices this year. Knight Frank forecasts only a 1% rise for Greater London, which is well below inflation. They also expect prices in the city's most expensive areas to either stay flat or drop by up to 2%.

Meanwhile, Savills predicts that average prices for pre-owned homes in the capital will fall by 4% in 2026. They anticipate a 3% decline for prime central London and a 2% drop for outer prime areas, so it shows high levels of volatility.

Is London property still worth investing in?

Investors are taking a mixed approach. While some are selling off properties to avoid rising costs and taxes, others are choosing to stay, betting on London's long-term resilience and strong rental demand. With 2.7 million private renters in the capital, the demand for rental housing remains high.

International buyers are also showing renewed interest; estate agent Hamptons reported an 8% increase in applications from overseas buyers in the first three months of 2026 compared to the same period in 2025. Despite the challenges facing landlords, experts like James Mulvaney of Clifton Private Finance suggest that growth is still possible for those using strategies like the "Buy, Refurbish, Refinance, Rent" (BRRR) method.