London's premium property market is facing a challenging period, with significant price reductions observed in high-value homes. A flat in Queen’s Gate Gardens, South Kensington, for example, has seen its listing price reduced by nearly £1 million since last year, now standing at £4.4 million. Other properties in areas like Notting Hill have also experienced multi-million pound price cuts.
This trend is particularly pronounced in inner London boroughs, where prices fell by 8.3% in the year ending June, according to the Office for National Statistics. This contrasts with a 2% rise in the average UK home price over the same period. Westminster experienced a 25.4% year-on-year price drop, the City saw a 20.4% slump, and Kensington and Chelsea recorded a 14.7% decrease.
Factors contributing to this downturn include properties becoming overvalued in the mid-2010s, followed by impacts from Brexit, the Covid pandemic, higher property taxes, and increased borrowing costs. Owners who purchased at the peak may now face losses of up to 25% if they sell, according to Savills estimates. The average discount to asking price for prime properties widened from 8.3% in the first half of 2025 to 10.4% in the first half of 2026, with properties spending an average of 186 days on the market.
Some experts suggest that a decline in international investment and the exit of super-wealthy groups, partly due to tax changes like the abolition of the non-dom tax regime, have contributed to the market softening. Despite this, demand remains strong for "the very best in class" properties, with some buyers still willing to pay above asking price for exceptional homes.