London house prices: Is the capital's property boom over?

The London property market has historically been attractive for many reasons, in particular for its potential for long-term growth and demand.

While house price growth across the UK has stalled, London has probably seen the biggest decline. But could London’s fortunes be changing any time soon and will it continue to attract buyers and property investors?

House prices in the city stalled between 2015 and 2025, growing just 16% compared to 44% across the UK, according to the latest Land Registry data.

The London housing market has struggled to continue its upward trend following the 2008 financial crash, and was then hit by the coronavirus pandemic and a fiscally turbulent 2025.

o much so are the struggles in the capital, it has replaced the North East of England as the region where sellers are most likely to sell for less than they paid, estate agent Hamptons finds.

In 2025, 14.8% of Londoners sold their property for less than they bought it for.

Aneisha Beveridge, head of research at Hamptons, said house price growth in London was “no longer the one-way bet it once seemed".

“In some cases, even owners who bought a decade ago still face getting back less than they paid.”

What’s next on the cards for London and could 2026 prove to be a turning point?

Will London house prices rise in 2026?

The average house price in London is £553,258 – 104% higher than the UK average of £271,188.

But prices across the capital have languished in recent years. In 2025, they fell by 1.8%, Land Registry data shows.

But, things could be about to turn a corner, with estate agent Savills saying that although house price growth in the capital will flatline in 2026, prices will grow from 2027 and continue to rise until 2030. Cumulatively, it forecasts London house prices will grow by 13.6% between 2026 and 2030.

It expects prices in prime central London will fall by 2% in 2026 and flatline in 2027, but rise by 2.5% in 2028, 3.5% in 2029 and 4% in 2030.

Property portal Zoopla also expects prices in Bromley, Croydon and Twickenham to see decent growth between now and December.

Some areas in London could see house prices increase in 2026. Sutton, Uxbridge and Ilford are three areas Zoopla believes have the strongest potential for an upswing in prices this year.

Faisal Choudhry, director of research at Savills, said the 2025 Autumn Budget delivered a “better-than-feared” outcome for top-end buyers, adding the new mansion tax, coming into effect in 2028, is unlikely to have much of an impact on the upper-end market.

“Now, with greater clarity for buyers and sellers, we are seeing early signs that activity is beginning to pick up as buyers take advantage of more certainty and of where values sit,” Choudhry added.

Credit: ONS

Why have London house prices stagnated since 2015?

David Fell, lead analyst at estate agents Hamptons, said London house prices started shooting up in the spring of 2009 following the 2008 financial crisis, but growth fizzled out by the mid 2010s and prices haven’t picked up since.

He said the large-scale sale of flats, which are generally cheaper than houses, has kept overall house prices particularly suppressed since the start of 2025.

“Around 60% of sales last year in London were flats and that's weighed down on average London prices,” Fell explained.

This trend of lukewarm growth in flat prices pushing overall property prices down has been rumbling on since 2015.

The average price of all London properties rose from £476,915 to £553,258 (16%) between November 2015 and November 2025, according to the most recent Land Registry data.

But flats and maisonettes have gone up in price by just 5.4% (£410,233 to £432,744) over the same period.

In fact, flat and maisonette prices fell by 8% between August 2022 (£470,873) and November 2025 (£432,744).

What does it all mean for buyers and renters?

For buyers, London still remains an expensive option, particularly for first time buyers who face prices 10% higher than the national average. But for those drawn to the capital, now could be a good time to consider London before prices creep up in 2027.

For renters, it’s worth noting that rental costs have surged in recent years, but slowed in London in 2025 – the capital was the UK region with the slowest rate of private rent growth in the year to December at 2.1%, according to the Office for National Statistics.

Renters may face higher costs after 2026 though, as more landlords sell up due to regulatory changes and tax changes such as the Renters’ Rights Act and the hike to property income tax rates, according to Tom Bill, head of UK residential research at estate agent Knight Frank.

Is London property still worth investing in?

There is a mixed approach for investors. Some are selling due to costs and tax pressures, whereas others remain invested as London continues to show signs of resilience and rental demand.

According to Barratt Homes, there are 2.7 million private renters in London, providing opportunities for Landlords.

London also remains the number one international city for wealthy Gulf investors, according to the latest Gulf Cooperation Council Investment Barometer from AlRayan Bank.

Its survey of 150 high net worth individuals from Saudi Arabia, Qatar and the UAE with a minimum £10 million in wealth, found 29% invested in London property in 12 months ending September 2025 ahead of New York (23%), Paris (23%), Los Angeles (22%) and Tokyo (21%).

James Mulvaney, head of digital at property finance brokers Clifton Private Finance, said despite the challenges facing landlords, there was also potential for growth for those applying the Buy, Refurbish, Refinance, Rent (BRRR) method.

So, despite its challenges, it looks like London will continue its resilient streak, attract buyers, as well as investors both foreign and domestic as rental yields could deliver a return on investment, with the average rental yield in London ranging between 5% and 6%.

However, some landlords may take a more cautious approach with the changes laid out in the Renters’ Rights Act, including limiting advance rental payments to one month and giving tenants the right to request permission for a pet, starting to take effect from May this year.

https://moneyweek.com/investments/property/london-house-prices