London homeowners are facing a rude awakening when they come to try and sell their homes as property values in the capital continue to plunge.

Prices in parts of London are in freefall with some homeowners forced to cut their losses and sell for up to 50 per cent below what they paid in some cases.

Up until 2015, London's house prices were rising so quickly it would have seemed impossible to lose money.

Between 2009 and 2015, the average home in the capital rose by 83 per cent from a low of £263,000 to £482,000, according to Land Registry data.

But since then, house prices across swathes of the capital have barely moved - and now a full blown crash appears to be taking place.

For many flat owners who bought over the past decade selling at loss is almost to be expected while most house owners are likely to fetch little more than they paid for their home, even if they bought 10 years ago.

And while price falls are confined to London and parts of the south, there are fears that the downturn will now ripple out though Britain

Here Money Mail reveals the true extent of the capital's struggling property market and whether the crash could spread and what you need to do to make the most of London's decline.

Flats are in freefall 

Since the start of 2023, the average price of a flat in London has fallen by more than 7 per cent - but in some locations prices are collapsing.

In the City of Westminster, which includes popular areas such as Marylebone, Maida Vale, Bayswater, Paddington and St John's Wood, average prices are down more than 27 per cent since the start of 2023, according to the Land Registry.

In Kensington and Chelsea, the average flat is now selling for less than £950,000 – down from almost £1.2m in 2023 after a 20 per cent fall. 

In Hammersmith and Fulham average flat prices have fallen by more than 17 per cent since the start 2023, from almost £700,000 to around £575,000. 

Those attempting to sell on an ex-new build home are often finding their home is worth nowhere near the amount they paid.

In Hammersmith and Fulham, two-thirds of all flat owners who previously bought new properties sold at a loss last year, according to analysis of Land Registry data by Hamptons.

Those living in London's older flat conversions – many of Victorian or Georgian origin – are also far from immune either.

Close to one in every five London flat owners who bought in the last 20 years sold a second-hand flat at a loss last year, according to Hamptons.

That rises to 30 per cent in the London borough of Kensington and Chelsea and 26 per cent in the City of Westminster.

Many London flat owners are in for a rude awakening when they come to try and sell their homes, according to Charlie Lamdin, founder of housing marketplace bestagent.co.uk and presenter of the Moving Home with Charlie podcast.

He says: 'This is particularly the case for those that bought in the last decade and those who bought new builds with the Help to Buy scheme.

'People who bought new build in London in the early 2020s are doing really badly. We're talking about 20 to 30 per cent losses on the whole.'

House prices are flatlining 

Houses in the capital appear to have been the most resilient when it comes to holding their value.

Whereas the average flat in London has fallen in value since 2016, the average terraced house has risen more than 22 per cent in that time, according to Land Registry figures.

Less than 4 per cent of house owners have sold at a loss last year, according to analysis by Hamptons. 

But even the price of terraced houses have dipped since peaking in September 2022 and leaving some house sellers facing big losses.

Analysis of Rightmove listings by analytics firm PropertyData of houses sold in the last nine months, found examples of homes selling at almost 50 per cent losses.

An end of terrace house in Tottenham sold for £220,000 last year having been bought in 2020 for £430,000.

And a three bedroom semi-detached house in South Woodford in east London with a garage and off street parking sold for £371,000 last year having been bought for £640,000 in 2015.

There are also many house sellers having to cut their asking price continually - and still finding no buyers are interested.

A four bedroom house on Zoopla currently for sale in Richmond is listed for £1,895,000 having been reduced four times since June last year having been initially put up for £2,695,000.

And a five bedroom house in Walthamstow has seen three price reductions going from £2,000,000 to £1,450,000 since June - and still no buyer.

'Houses in London have also not done well,' says Charlie Lamdin. 'Most sellers are still making assumptions about house prices always going up. 

'They'll be clinging to their 2020 valuations of their houses and will get a rude awakening when they come to the market.'

The areas of London homes worst hit 

Estate agent Knight Frank said 2025 saw the biggest annual falls in central London since the market was closed during the pandemic in July 2020. 

It says prices are down by 22 per cent since the last peak in mid-2015.

It is not hard to find examples across central London where buyers are picking up properties at prices not seen since 2014 or even 2013.

A two bedroom flat in Ebury Square in Chelsea bought for £2,945,000 in 2015 sold four months ago for £2,225,000, representing a 24 per cent loss for the seller. 

In the City of Westminster, a recent sold listing on Rightmove shows a two bedroom flat in Queen's Gardens in Bayswater that was bought for £1,650,200 in June 2014, but sold on 3 October 2025 for £630,000 realising a 62 per cent loss.

In upmarket Kensington and Chelsea, even the cheaper homes in the area have suffered. One homeowner who bought a one bed flat in Bramah House in SW1 in 2014 for £499,000 sold last year for £255,000, a 49 per cent drop.

'Properties across the super prime market in London have seen some really big falls,' says Charlie Lamdin.

'I saw a house this morning that was listed a year ago at £59m and was reduced to £49m in June last year and it remains on the market without bites.

'I talk to a number of  estate agents working in the super prime areas of London and they say that that area of the market is effectively dead.

'There has effectively been a proper house price crash across London's most expensive homes.'

But perhaps the area of the market hit hardest in London are leasehold flats, according to Lamdin.

'Even the average flat price is now around what people were paying in 2013 prices,' adds Lamdin. 'That's in nominal terms, before you take into account wage increases and inflation.

'One estate agent I am working with is now declining to sell leasehold flats because they are too hard to sell and often fall through even when they do manage to find a buyer, often because mortgage lenders refuse to offer lend.

'Within the leasehold sector, purpose built blocks have done the worst, they're the ones with high service charges and managing agents.

'Converted older flats have not suffered so badly as they are typically not at risk of high service charges and ground rents.'

Flat owners, many of whom are leaseholders, appear to be enduring losses all over the capital.

One homeowner who bought a two-bedroom flat in Brompton Park Crescent in Fulham for £580,000 in 2019, sold in October last year for £500,000, 14 per cent less than they paid for it.

Across the river in Clapham, homeowners are faring no better.  A flat bought in 2021 on Tremadoc Road for £668,000 sold in October for £420,000 representing a 37 per cent loss.

Even worse, someone who bought a three bedroom flat near Clapham Common on Grandison Road for £1,650,000 in 2021, just sold for £990,000 in October; a 40 per cent fall.

Cheaper properties even further out are also at risk of being sold at big losses.

A one bedroom flat sold on Watford Road in Wembley for £150,950 in 2003, sold in October last year for £115,000, according to Rightmove.

Could it spread to the rest of the UK?

London tends to lead the way when it comes to a house price boom and likewise it tends to be the first to see its prices fall when the market turns.

While that was historically a reasonable observation, this time could be different, according to Lamdin.

'So many fundamentals have changed now that I think it’s risky to expect past phenomena to repeat,' he says.

'London’s dominance has been lost. First, remote working went mainstream and now the super rich are being taxed out.

'I think London price falls are likely to spread within commuting distance, so most of the south east.

'The south west is experiencing its own price falls for different reasons - mainly over exuberance during covid and second home taxes, and weakening tourism on the back of falling disposable incomes.

'I think Manchester especially but also Liverpool will hold up better than most other cities and actually benefit from the London exodus as house prices may be falling but the cost of living isn’t.'

What can sellers do in a falling market?

The most important thing that sellers can do to avoid rubbing salt into their wounds any further is to avoid pricing their homes too high, according to Lamdin.

Rightmove and Zoopla are littered with examples of homeowners who priced too high and are now suffering the consequences.

A 13th floor studio apartment in Canary Wharf in east London is still available after five price reductions. Having first been listed for £500,000, it is now available at £325,000. It previously sold for £492,500 in 2016.

At the other end of the spectrum, a grand two-bedroom 1,500sqft white stucco-fronted flat in Holland Park in West London has had four price reductions with no buyer as yet.

Having been initially listed at £2.15million it is now for sale at £1.5million. It previously sold for £1,995,000 in 2015.

Lamdin says: 'If selling is an unavoidable requirement, the only way to minimise your loss is to make sure you don't price the property too high when you bring it to the market

'If you want to secure the best price for your home in the current market, you'll need people through the door within the first two to three weeks to create interest and competing buyers.'

What can buyers do to make the most of price drops?

Some experts across the industry say that now would be a good time to be brave and buy the dip.

But there are still many sellers clinging on in the hope their home will sell for what it might have done a few years ago.

It can therefore be very confusing for buyers trying to establish what is selling for fair market value or indeed whether a seller will be open to lowball offers.

Phil Spencer, co-presenter of the Channel 4 show, Location, Location, Location and founder of the property advice website Move iQ, says it's worth putting the estate agent on the spot and asking them as many questions as you can about the seller.

He says: 'Before you make a low-ball offer, ask the estate agent the seller's reason for selling and how long the property has been on the market.

'Quiz them on whether there have been other offers; agents have to tell you if so, albeit not the amount, but it is worth asking for the numbers just in case.

He adds: 'Two key tell-tales to look out for are any signs the seller is in a hurry - ask where they are moving to and why - or if they have been struggling to get serious offers.

'Knowing either of these things will tell you just how hard you can push on price. In the current market, you may be surprised at just how hardball you can play.'