House prices in central London have fallen sharply, with new official figures showing a 25.4% drop in the average property price in Westminster over the past year.
According to data from the Office for National Statistics (ONS), the average home in Westminster was worth around £854,000 in June 2026, compared with £1.145 million in June 2025. This represents a fall of approximately £291,000 in just 12 months.
The figures highlight the continued weakness in parts of London’s property market, particularly in some of the capital’s most expensive areas.
Westminster Sees One of the Sharpest Falls
The decline in Westminster has accelerated in recent months.
Annual house price growth in the borough fell by 21.9% in May, following a 17.5% decline in April and a 9.9% fall in March. The latest 25.4% drop therefore represents a significant worsening in the pace of decline.
The fall has affected different types of properties across the borough, although flats have experienced some of the sharpest reductions.
In June 2026, average Westminster property prices were:
- Detached homes: £3.687 million
- Semi-detached homes: £2.581 million
- Terraced homes: £1.548 million
- Flats and maisonettes: £758,000
For buyers who purchased with a mortgage, the average property price was approximately £837,000, down 25.2% from £1.119 million a year earlier.
First-time buyers have also seen a substantial change, with the average price they paid falling to £766,000, around 25.3% below the previous year’s figure.
London Property Market Remains Under Pressure
Westminster is not the only London borough experiencing significant price falls.
Across the capital, average house prices dropped by 2.5% in the year to June 2026. The ONS data suggests London has now experienced annual house price falls for ten consecutive months.
Some areas have recorded considerably larger declines than the London average.
Kensington and Chelsea saw prices fall by 14.7%, equivalent to a reduction of around £216,000 in the average property price. Hammersmith and Fulham recorded a 13.3% decline, while Tower Hamlets saw prices fall by 13.1%.
Other notable falls included:
- Islington: down 8.1%
- Camden: down 7.1%
- Wandsworth: down 5.2%
The figures demonstrate how uneven the London market has become, with higher-value areas facing particularly strong pressure.
Tax Uncertainty Adds to Market Concerns
The latest falls come amid continued uncertainty over potential changes to property and wealth taxation.
Plans for a potential mansion tax on properties worth £2 million or more have raised concerns among homeowners and property investors, particularly in London and the South East where high-value homes are more common.
There is also uncertainty over whether further taxes on wealth and assets could be introduced in the autumn Budget.
This uncertainty can make buyers and sellers more cautious, as people may delay property decisions while waiting to see what changes the government could introduce.
Experts Question the Scale of the Falls
While the ONS figures show a substantial decline in Westminster, some property professionals have questioned whether the data fully reflects what is happening on the ground.
Tom Bill, head of UK residential research at Knight Frank, pointed to longer-term pressures affecting prime central London, including higher Stamp Duty costs, changes to the tax treatment of non-domiciled residents and the reduced attractiveness of property investment for some landlords.
He also noted that uncertainty around possible tax changes could be contributing to the current lack of confidence among buyers and sellers.
This suggests that while the ONS figures point to a significant decline, the experience of individual properties and neighbourhoods can vary considerably.
Rents Continue to Rise
The weakness in property prices is happening alongside continued rental growth across London.
Average rents increased by around 3% in the year to July, accelerating from the 2.2% annual growth recorded a month earlier.
This creates an interesting contrast for property investors. While property values have fallen in some parts of London, rental costs remain under pressure as tenants continue to face a limited supply of homes.
For landlords, however, higher rents do not necessarily compensate for falling property values and increased ownership costs. Mortgage rates, taxation and regulatory changes continue to influence the potential returns from property investment.
What Does This Mean for Property Investors?
The sharp fall in Westminster property prices could create opportunities for buyers who have the finances and confidence to invest during a weaker market.
Lower purchase prices may allow investors to negotiate more favourable deals, particularly where sellers are under pressure to move. However, investors need to look beyond headline price reductions and consider rental income, financing costs, taxes and the long-term prospects of the area.
For landlords, the continued strength of rental growth could provide some support, but falling capital values may affect overall returns.
The situation is particularly relevant for investors considering expensive London properties, where tax changes could have a greater impact on both purchase costs and future returns.
The Wider UK Market Is More Stable
The sharp decline in parts of London contrasts with the wider UK housing market.
Average UK house prices increased by around 2% in the year to June 2026, reaching approximately £272,000.
This highlights the significant difference between the national market and some of London’s more expensive boroughs.
While central London continues to face pressure from high taxes, borrowing costs and weaker demand, other parts of the UK are showing more stable price growth.
What Happens Next?
The outlook for London’s property market remains uncertain.
Potential tax changes, mortgage costs and wider economic conditions could all influence buyer confidence over the coming months. If further taxes are introduced on higher-value properties, the prime London market could face additional pressure.
For buyers, falling prices may create opportunities to negotiate, while sellers may need to adjust their expectations to reflect current market conditions.
For landlords and property investors, the latest figures reinforce the importance of looking at the full investment picture rather than relying solely on property price growth.
With house prices falling sharply in Westminster while rents continue to rise, London’s property market is becoming increasingly complex — and the impact of future tax and economic policies could play a major role in determining what happens next.
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