London’s property market is continuing to face mounting pressure, with the latest e.surv House Price Index showing that the capital remains the only region in Britain where house prices are falling.
While much of the UK housing market is still recording modest growth, London is moving in the opposite direction. The latest figures reveal that average property prices across the capital fell by 3.6% in the year to April 2026, highlighting the growing affordability challenges facing buyers in some of the country’s most expensive areas.
However, the overall figures only tell part of the story. Beneath the headline decline sits an even sharper divide between inner and outer London, particularly within the flat market.
According to the report, inner London has been hit hardest, with property prices falling by 8.7% year-on-year. Outer London also recorded a decline, although the drop was considerably smaller at 2.6%.
The data shows that flats have become one of the weakest-performing property types in the capital. In inner London, flat prices are now sitting 11.2% below the levels seen in April 2020. By contrast, flats in outer London remain 4.1% higher than they were five years ago.
This growing gap between inner and outer boroughs highlights how buyer behaviour is shifting as affordability pressures continue to build. Areas heavily dominated by higher-value flats appear to be struggling most as mortgage costs remain elevated and investor confidence softens.
Industry experts say the changes are being driven by a combination of rising borrowing costs, stretched affordability, and weaker demand from both homeowners and investors.
Rob Owens, Head of Research at e.surv, said the decline in London prices is not being felt evenly across the city. He explained that inner London, where flats make up a much larger share of the housing stock, is seeing the greatest strain.
He noted that expensive parts of the capital are particularly vulnerable to affordability pressures, with buyers becoming increasingly cautious due to higher mortgage repayments and broader economic uncertainty.
Owens added that investor demand for flats has also weakened in recent years, which is adding further downward pressure to prices in central London boroughs.
While outer London has also softened, it has proved more resilient than the city centre. Many buyers continue to look towards more affordable suburban areas where larger homes and better value remain available.
The latest figures underline how sensitive the London market has become to pricing, property type, and buyer affordability.
Outside the capital, the housing market is performing more steadily. Across Great Britain, average property prices rose by 0.2% during the month and increased by 1.7% annually, taking the average house price to £327,800.
Quarterly growth also remained positive at 0.3%, suggesting the wider market is still moving forward, albeit at a much slower pace than in previous years.
The strongest-performing areas continue to be the more affordable regions of the UK.
Scotland recorded the highest annual growth at 4.4%, followed by the North West at 3.7%, Yorkshire and the Humber at 3.2%, and Wales at 3%.
These regions continue to benefit from relatively lower house prices, making them more accessible for buyers despite higher mortgage rates and cost-of-living pressures.
Affordability is increasingly becoming one of the key drivers shaping the property market. Buyers are showing stronger demand in areas where property prices remain within reach, while more expensive locations are beginning to lose momentum.
Southern England, outside London, has also experienced slower levels of growth.
The South East saw annual price growth of just 0.4%, while the East of England recorded a 1% rise. The South West performed slightly better with growth of 1.4%, although this still remains relatively subdued compared with northern regions.
Despite these slower gains, London remains the clear outlier, standing alone as the only region where both annual and quarterly property prices are currently falling.
The sharp decline in inner London flats also reflects wider changes in buyer priorities since the pandemic. Many buyers are now placing greater value on larger homes, outdoor space, and affordability rather than central city living.
At the same time, landlords and investors are facing increasing financial pressures due to higher mortgage costs, tighter regulations, and tax changes, reducing appetite for investment in expensive flat markets.
The weaker performance of flats could also create opportunities for some buyers, particularly first-time buyers who may find prices in certain areas becoming more negotiable after years of rapid growth.
However, affordability challenges still remain significant, especially given current mortgage rates and higher monthly repayments.
Although the broader UK market continues to show resilience, the latest e.surv figures suggest the divide between affordable and high-cost areas is becoming more pronounced.
Regions with lower average house prices are continuing to attract stronger demand, while expensive urban markets such as London are facing slower sales activity and greater downward pressure on prices.
Looking ahead, much will depend on the direction of mortgage rates, inflation, and wider economic confidence.
If borrowing costs begin to ease later in the year, demand in London could start to stabilise. However, for now, the capital’s property market appears to be under considerably more pressure than the rest of the country.
The latest data paints a picture of a housing market increasingly shaped by affordability, with buyers becoming more selective and price-conscious in response to ongoing financial uncertainty.
For London’s flat market in particular, the adjustment may still have further to run before conditions fully improve.
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