Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.
Inner London Property Prices Fall Sharply, Flat Market Under Pressure
Property prices across London have declined by 3.6% year-on-year, with the steepest falls seen in higher-value inner boroughs, according to new data from E.surv. The analysis shows inner London prices are down 8.7%, compared to a 2.6% fall in outer London.
The average property price in inner London now stands at £687,415, while outer London averages £518,655. This represents a price gap of nearly £169,000 between the two areas. E.surv's data indicates that affordability pressures began in the capital’s most expensive areas before spreading to the wider market.
Diverging Market Trends
Outer London continued to show annual price growth through much of 2024 and early 2025, while inner London had already started registering price falls. These declines have become sharper over the past year, with pressure starting in higher-value inner boroughs before affecting other areas.
A City Tracker analysis referenced in the report notes that 17 out of 30 major UK cities have yet to recover to 2022 price levels. When adjusted for inflation, which has risen 16% during this period, investment returns are further diminished. Wales shows positive year-on-year performance in most indices, though Cardiff prices remain marginally below 2022 levels.
Flat Sector Weakness
The weakness is particularly pronounced in the flat sector. Inner London flat prices are now 11.2% below April 2020 levels, with the index at 88.8 in April 2026. By contrast, outer London flats remain 4.1% above their April 2020 level, despite some recent softening.
E.surv attributes the weakness in inner London flats to several overlapping factors, including higher mortgage rates, increased service charges, and running costs. The end of Help to Buy, a larger supply of apartment stock, and tax changes such as higher stamp duty for overseas buyers and the introduction of a mansion tax from 2028 are also cited as contributing factors.
The analysis comes amid rising void costs for landlords and broader regulatory changes affecting the property sector. E.surv notes that these factors may not fully explain the fall in flat prices but are likely adding to caution in a market already constrained by weaker affordability and softer demand.
For letting agents and inventory clerks, the data points to a more price-sensitive inner London flat market, with sold prices reflecting weaker demand, higher buyer costs, and increased competition from similar stock.
Source: PropertyWire