For the billionaires in Mayfair, Belgravia and Knightsbridge, it does not make happy reading: house prices are down by as much as 35 per cent in prime central London as the rich flee Labour’s tax assault.
Now the effects are rippling out across the capital and into commuter areas popular with families.
Property values have fallen by as much as 8 per cent in some greater London boroughs and home counties neighbourhoods this year, new figures show – with estate agents saying they are struggling to find buyers.
But experts say there is a huge silver lining: the falls could be a rare opportunity to snap up a bargain – particularly for families who work in London or those keen to return having moved out during the pandemic ‘race for space’.
James Rawes, at Garrington Property Finders, says: ‘London remains a popular place to live and it will continue to weather the storm.
‘I always see it recovering. The real question is: when?’

Bargains: Property values have fallen by as much as 8% in some greater London boroughs and home counties neighbourhoods this year, new figures show
What is happening?
The slump in prices means 14.2 per cent – one in seven – people who have sold properties in London got back far less than they paid, according to estate agents Hamptons.
That’s compared to 8.6 per cent of sellers across England and Wales who have lost money this year.
The main reason is there are simply too many homes currently for sale in London – and not enough buyers.
Mr Rawes says: ‘Estate agents have definitely got too much stock. They have too much to sell and not enough buyers – it doesn’t look good for them. They are trying to encourage their clients to reduce their prices.’
At the heart of the problem is Labour’s tax raids on wealth. High-net-worth individuals are fleeing, and overseas buyers – who normally compete to snap up swathes of London rental properties and flats – are staying away.
Foreign buyers who already own a home elsewhere can face both the 5 per cent stamp duty second home surcharge and the 2 per cent non-resident surcharge on top of standard rates.
On a £2million home purchase, this would mean a stamp duty bill of £293,750.
Buying agent Henry Pryor says: ‘It’s got to the point where buyers could rent for three or four years just for the price of stamp duty.’
The crunch has triggered a flood of properties to enter the market and prices to dip. Trends in the central London market typically filter out into surrounding areas, particularly the M25 commuter belt, where prices tend to be driven by the purchasing power of families moving out of the capital.
And those families are now also being hit by higher mortgage and stamp duty rates.
In summer 2020, the best five-year fixed rate mortgage was 1.3 per cent. Now rates are around 4 per cent.
If borrowing £750,000 over 25 years, this means an extra £1,000 a month – limiting the amount buyers can offer on a property.
Since thresholds were changed in April, 83 per cent of buyers now face paying stamp duty – up from just 49 per cent before the changes, property portal Zoopla found.
London versus the country
Price tags in London compared to the English average have been falling since January 2016, when the capital’s premium hit a peak of 135 per cent, according to Hamptons.
Back then, a London property was worth £489,741, compared to £208,050 in the rest of England.
Now a London home is worth 95 per cent more than the typical English one, as the gap gradually closes – £565,637 compared to £290,395 respectively.
The long-term data reveals a cyclical rise and fall in this figure, with the gap widening and closing over decades. But it’s currently closing.
Richard Donnell, executive director at Zoopla, explains London homes soared in price after the global financial crisis, which was fuelled by lower mortgage rates, easier access to credit and strong private investor demand.
‘But this changed in 2016 with the introduction of tax changes aimed at private landlords and overseas investors in UK property,’ he says.
‘This dented investment just as the Brexit vote arrived, which hit business confidence and investment in London.
‘At the same time, new mortgage regulations were being introduced to stop a house price boom off the back of lower mortgage rates.
‘These events capped demand and buying power across the UK, hitting particularly hard in London.’

Window: Experts say now could be a rare opportunity to snap up a bargain – particularly for families who work in London or those keen to return having moved out during the pandemic
Opportunities for buyers
For those with buyer’s remorse after moving out of London, or who simply want or need to live in the capital for work, now could be a great time to go house-hunting.
Buying agent Henry Sherwood says: ‘If you’re selling then it’s not great. But for buyers it’s fantastic.
‘For example, those who moved out during lockdown can move back into central London for a fraction of the cost they would have paid at the previous peak.’
So where to look? While prices overall rose 0.2 per cent from January to May in Tower Hamlets, East London, they were down 8.1 per cent, according to analysis from London estate agent Benham and Reeves.
Properties in the borough, which is next to the City and home to Canary Wharf, are selling for £479,284 on average, down from £521,663.
And prices in Redbridge, north-east London, fell 5.4 per cent in that period, from £493,694 to £467,212. Barnet, in north London, saw prices drop 3.9 per cent, while homes in sought-after Richmond fell by 3.8 per cent.
In outer London, Croydon, Sutton and Enfield saw falls of 0.3 per cent, 0.3 per cent and 0.5 per cent respectively.
And in the South-East, prices fell by an average 0.7 per cent – down 3.4 per cent in Surrey Heath and 3.2 per cent in South Oxfordshire.
Further out of the capital, prices rose in both Milton Keynes (6.1 per cent) and Basingstoke and Deane (5.9 per cent).
How to take advantage
The advice from experts is to put yourself in a position to negotiate hard.
If you need a mortgage and to sell your own home to move, line up both before you put in an offer.
Estate agents like what they call ‘proceedable’ buyers and will recommend their offers to sellers.
To take advantage of price falls, make sure you’re selling in an area with strong demand and buying in one where prices are falling.