House prices have continued to tumble in parts of London, with 10s of thousands falling off the average home. It cost £551,000 to buy the average house in London in the year to December 2025. That’s a fall of 1.0% according to the latest figures from the Office for National Statistics. It makes London the only region of the UK to have experienced a fall in average house prices over the course of the last 12 months.

The falls have been far more drastic in some parts of the capital, however. The City of Westminster has seen the average house price fall by 14.8% over the last year to an average of £880,000. That’s the largest proportional decrease of any local authority in the country and is the equivalent of around £153,000 being lost on the average home.

In Kensington and Chelsea, meanwhile, average prices have fallen by 11.5% to just under £1.2 million. Average prices are down by 11.1% in Camden to £784,000, which is equivalent to £98,000 than a year earlier.

In Tower Hamlets average prices are down by 10.9% to £464,000 (a drop of around £56,000), in Hammersmith and Fulham they’re down by 9.5% (a drop of around £75,000), and in the City of London by 7.1%.

Andrew Montlake, CEO at London-based Coreco, a mortgage broker. said: “House prices have been under pressure in London for some time, as the latest data shows. For too long, prices grew too fast and now London is recalibrating. But it’s an important recalibration.

“Finding a deposit is still an Everest for so many aspiring first-time buyers given the level prices are at in the capital. Although house prices in London have stagnated for a while, they remain spectacularly high compared to other areas of the country.

“As a result, saving for a deposit has not become any easier, especially given the high cost of living and increasing rents, which eat up so much of what people take home. Those who are fortunate enough to get onto the property ladder in London usually get help from the Bank of Mum and Dad, or even Gran and Grandad, as without that it’s mission impossible.

“If you are fortunate enough to get a deposit to buy in London, affordability in itself is not such an issue as it was a few years ago as mortgage rates have come down to a more acceptable level — and they continue to fall with some lenders cutting rates quite sharply for first-time buyers over the past week.

“Rates are by no means as low as they were five or six years ago, but they are still comfortably below the historical average. And in London more than anywhere, that matters.

“Crucially for the London property market, lenders also eased their criteria throughout most of 2025 and are now much more willing to lend at increased income multiples. People can now borrow more, which means that elusive first rung on the London property ladder finally becomes achievable.

“And even though mortgage payments may be quite high in the capital, they’re often still better than equivalent rental payments, which can be borderline obscene.

“Lenders cracking the affordability conundrum has been a gamechanger for the London property market and I expect things to heat up again in 2026. Prices will not shoot up, as they’re so high already, but improved affordability is helping more people get on the ladder. That, in turn, oils the rest of the property market in the capital.

“I definitely think that those who buy earlier in the year are more likely to get a better deal than those who wait until the tail end of 2026, as prices will have risen by then. And lower mortgage rates could see the market shift from a buyers’ market to a sellers’ market.

“January on the whole was quiet, which is not unusual, but with mortgage lenders now cutting rates and the Bank of England saying very clearly that another cut to the base rate is incoming if inflation cools, which it did in January to 3%, things have now picked up. February is seeing demand return, and then some.

“The people who are buying now seem very determined while sellers in London also seem more motivated, and are not hanging on for the silly prices they may once have received. 2026 has the potential to be a turning point for London’s property market after a subdued three or four years.”

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