Nearly £250,000 wiped off average house price in central London in a year in 23% slump

House prices have plummeted by more than a fifth in central London in a year, according to new figures.

The Office for National Statistics data showed they plunged by 22.8% in Westminster in the 12 months to May.

This was by far the biggest fall in the capital, taking the average house price in Westminster to £836,331.

This compared to £1,083,519 in May 2025, a fall of just over £247,000.

“It’s a very substantial correction after a very long run of higher house prices,” said Russ Mould, investment director at AJ Bell.

“There is combination of factors ranging from the economic to the political.”

They included higher interest rates, leading to bigger mortgage payment bills, tax changes, and some people who may have moved abroad as they had possibly decided “their capital is not as welcome in the UK as it once was,” he added.

Property prices have been falling in London (AFP/Getty)

The falls in central London may also have been fuelled by the new “mansion tax” on homes worth £2 million and over due to come into force in 2028.

The capital’s property market could be further hit if Prime Minister Andy Burnham presses ahead with a new homes levy to replace council tax and stamp duty, which he has previously backed.

The reform, based on the value of properties, could land London with an extra £7.5 billion property tax bill.

The second biggest drop in house prices in the year to May was in Tower Hamlets, of 14.5% or £76,000, followed by Hammersmith and Fulham at 10.9% or £89,000, and Kensington and Chelsea at 10.7% or £150,000.

The overall decline in house prices across London accelerated to 3.7% in the year to May, up from 2.3% in the 12 months to April.

Richard Donnell, executive director of research at Zoopla said: “Political change, the World Cup, a scorching summer and elevated mortgage rates have hit housing market activity this summer.

“Zoopla’s very latest data shows 20% fewer buyer inquiries than a year ago and 7% fewer sales agreed.”

Borough	Average house price May 2026	% change in year to May 2026	£ change in year to May 2026
Barking and Dagenham	£361,000	Little change	Little change
Barnet	£591,000	-4.3	-26,000
Bexley	£409,000	+2.2	+9,000
Brent	£549,000	-3.3	-19,000
Bromley	£525,000	Little change	Little change
Camden	£806,000	-6.2	-53,000
Croydon	£397,000	Little change	Little change
Ealing	£569,000	-2.5	-15,000
Enfield	£469,000	Little change	Little change
Greenwich	£463,000	Little change	Little change
Hackney	£608,000	Little change	Little change
Hammersmith & Fulham	£729,000	-10.9	-89,000
Haringey	£634,000	+2.4	+15,000
Harrow	£530,000	Little change	Little change
Havering	£453,000	+2.8	+13,000
Hillingdon	£468,000	Little change	Little change
Hounslow	£501,000	-2.4	-13,000
Islington	£670,000	-6.4	-46,000
Kensington & Chelsea	£1,256,000	-10.7	-150,000
Kingston	£582,000	Little change	Little change
Lambeth	£545,000	-2.9	-16,000
Lewisham	£497,000	+2.3	+11,000
Merton	£597,000	-1.3	-8,000
Newham	£405,000	-1.4	-6,000
Redbridge	£496,000	+2.4	+12,000
Richmond	£789,000	-2.5	-20,000
Southwark	£579,000	Little change	Little change
Sutton	£445,000	Little change	Little change
Tower Hamlets	£444,000	-14.5	-76,000
Waltham Forest	£524,000	+3.1	+15,000
Wandsworth	£660,000	-6.1	-42,000
Westminster	£836,000	-22.8	-247,000
		Source: ONS

The figure for the city are in stark contrast to house prices rising on average across the UK.

The size of the Westminster fall may be partly down to fewer transactions which can influence the scale of drops.

But the monthly figures from the ONS show increasingly bigger falls in central London.

They were down 18.8% in the year to April in Westminster, 12.3% in the 12 months to March, while the figure was 11.6% for February and 9.6% for January.

The average UK house price increased by 2.7% in the 12 months to May, slowing from a 3.9% annual increase in April, the ONS said.

Across the UK, the typical house price in May was £271,000.