Westminster house prices crash 23% as wealthy buyers flee

Britain’s most expensive property market is suffering a dramatic correction, with house prices in central London collapsing by more than a fifth in a year as higher borrowing costs, tax uncertainty and political change weigh on wealthy buyers.

Figures from the Office for National Statistics (ONS) show average property prices in Westminster fell 22.8 per cent in the 12 months to May — the steepest decline anywhere in the UK.

The fall wiped more than £247,000 from the average Westminster home, reducing prices from £1.08 million in May 2025 to £836,331 a year later.

The scale of the decline highlights the growing pressure on London’s prime property market, which has struggled since interest rates surged and international investors became more cautious about committing capital to Britain.

“It’s a very substantial correction after a very long run of higher house prices,” said Russ Mould, investment director at AJ Bell. He pointed to a combination of economic and political pressures, including expensive mortgages, tax changes and concerns among some wealthy buyers that “their capital is not as welcome in the UK as it once was”.

The prospect of further property taxation has added to uncertainty. Plans for a new “mansion tax” on homes worth more than £2 million, due to begin in 2028, are already influencing sentiment, while Prime Minister Andy Burnham’s previously backed proposal for a property-value-based levy could create further costs for London homeowners.

Other affluent boroughs also recorded sharp falls. Tower Hamlets saw prices drop 14.5 per cent, followed by Hammersmith and Fulham at 10.9 per cent and Kensington and Chelsea at 10.7 per cent.

London’s overall market declined 3.7 per cent annually, marking the ninth consecutive month of falling prices.

Richard Donnell, research director at Zoopla, said political uncertainty, elevated mortgage rates and wider economic pressures had weakened activity, with buyer enquiries down 20 per cent year-on-year and agreed sales down 7 per cent.

The downturn contrasts sharply with the wider UK market, where average house prices still rose 2.7 per cent over the same period to £271,000.

For London’s prime districts, however, the era of seemingly unstoppable price growth appears to be facing its toughest test in more than a decade.