Central London’s property market is undergoing its sharpest correction in a generation, with official figures showing house prices in Westminster down 22.8 per cent in the twelve months to May 2026. The latest Office for National Statistics data puts the average Westminster home at £836,000, a figure that would have seemed unthinkably low to sellers just two years ago.
Prime boroughs bear the brunt
The decline is heavily concentrated in the capital’s most expensive postcodes. Tower Hamlets recorded a 14.5 per cent annual fall, Hammersmith and Fulham dropped 10.9 per cent, and Kensington and Chelsea — still London’s priciest borough at an average of £1,256,000 — fell 10.7 per cent. Camden, Islington and Wandsworth all posted declines of around six per cent.
The pace of Westminster’s slide has accelerated dramatically through the year: prices were down 9.6 per cent in January, 11.6 per cent in February, 12.3 per cent in March, 18.8 per cent in April and 22.8 per cent in May. Across London as a whole, prices fell 3.7 per cent in the year to May, a deterioration from the 2.3 per cent annual decline recorded to April, and the ninth consecutive month of falling prices in the capital.
Why central London is falling while outer boroughs hold up
Market analysts point to a combination of elevated interest rates, tax changes and an exodus of wealthy residents as the forces behind what one investment director described as a “very substantial correction”. A mansion tax on homes worth more than £2 million is due to come into force in 2028, and a proposed property levy replacing council tax and stamp duty could add an estimated £7.5 billion to London’s property tax bill.
Housing market researchers also note that political change, this summer’s World Cup and scorching weather have all dampened activity, with buyer inquiries down roughly 20 per cent year on year and agreed sales down seven per cent.
Yet the picture is far from uniform. Several outer London boroughs are still seeing prices rise: Waltham Forest is up 3.1 per cent, Havering 2.8 per cent, Haringey and Redbridge 2.4 per cent, Lewisham 2.3 per cent and Bexley 2.2 per cent. The divergence suggests the correction is primarily a repricing of prime central stock rather than a collapse in demand for family homes in more affordable districts.
What it means for buyers and sellers
For the wider UK, average prices rose 2.7 per cent in the year to May to a typical £271,000, although that growth is slowing from 3.9 per cent in April. The gap between a falling central London and a gently rising national market creates an unusual window: buyers who were priced out of zones one and two during the last decade may now find negotiating power they have never had, while sellers in prime areas face difficult decisions about whether to hold or accept a lower price before the 2028 tax changes bite.
Mortgage costs remain the decisive variable. As we reported this month, fixed mortgage rates have been edging down, and any sustained easing would cushion the correction. For now, the numbers tell a clear story: central London property, long treated as a one-way bet, is being repriced in real time — and the boroughs on the city’s edges are quietly outperforming its glittering core.
Borough snapshot: annual change to May 2026
Westminster -22.8% (£836,000); Tower Hamlets -14.5% (£444,000); Kensington & Chelsea -10.7% (£1,256,000); Hammersmith & Fulham -10.9%; Camden -6.2% (£806,000); Islington -6.4%; Wandsworth -6.1% (£660,000); Barnet -4.3% (£591,000); Brent -3.3% (£549,000); Richmond -2.5% (£789,000); Waltham Forest +3.1% (£524,000); Havering +2.8% (£453,000); Haringey +2.4% (£634,000); Redbridge +2.4% (£496,000); Lewisham +2.3% (£497,000); Bexley +2.2% (£409,000).
