Property prices in prime central London areas have declined significantly, with some neighbourhoods experiencing drops of more than 25% from their previous peaks, according to recent market data and estate agent reports.
Inner London boroughs recorded an 8.3% price decrease in the year to June, whilst the UK average rose by approximately 2%, according to the Office for National Statistics. Westminster saw the steepest decline at 25.4% year-on-year, followed by the City at 20.4% and Kensington and Chelsea at 14.7%.
Market correction underway
Properties in areas such as South Kensington, Notting Hill and Belgravia have experienced substantial price reductions. A flat at Queen’s Gate Gardens has seen its listing price drop by nearly £1m to £4.4m since last year. A nearby property initially listed at £20m was reduced to £14m this year, whilst a Notting Hill house that came to market at £16m two years ago is now offered at under £14m.
Anthony Payne, chief executive of data analyst LonRes, said London properties became overvalued during the mid-2010s following rapid price growth. The market was subsequently affected by Brexit, the Covid pandemic, increased property taxes and rising borrowing costs.
“London benefited dramatically from international investment and buyers wanting property here as a store of wealth and a way of making money,” Payne said. “These are the people that inflated the market, but now more and more of them are deserting it.”
Owners who purchased at peak prices now face potential losses of up to 25% if they sell, according to estimates from Savills.
Tax changes impact buyer sentiment
Jeremy Gee, managing director at Beauchamp Estates, attributed the decline partly to the departure of high-net-worth individuals from the UK, particularly following the abolition of the non-dom tax regime.
“There is a section of society who have left the UK recently for lots of reasons, but mainly because of tax,” Gee said. “When there are not that many buyers and lots of properties, the prices are going to be softer.”
The announcement of a proposed mansion tax on properties valued over £2m has also contributed to market uncertainty, according to industry professionals.
Extended marketing periods
Prime properties spent an average of 186 days on the market in the first half of 2026, up from 178 days in the corresponding period of 2025, according to LonRes data. The average discount to asking price widened from 8.3% to 10.4% over the same period.
Harry Dawes, a buying agent based in Belgravia, said sellers who typically hold these properties for at least a decade are accepting losses. “We bought three flats for a client’s kids last year – two in Chelsea and one in Notting Hill – and every seller was selling at a loss,” he said.
The challenges in London’s prime market come as house price to earnings ratios have fallen to their lowest levels since 2015 across the broader UK market, whilst mortgage rates have reached two-year highs amid inflation concerns.
Two-tier market emerges
Stuart Bailey, head of super-prime London sales at Knight Frank, said a division has emerged between premium properties and those selling at discounts. Properties described as having prime addresses, views and recent refurbishment still attract buyers willing to pay above asking price.
“It is a matter of premium or discount, retail or trade, brand new or not, and there is nowhere in between,” Bailey said. “It’s the discounted properties dragging the market down.”
Bailey added that sellers are increasingly realistic about pricing, as they “do not see material price growth on the horizon.”
The data presents a contrast with the broader London market, where the average UK house price stood at just under £275,000 in September, according to Nationwide.