London housing market faces falling prices and climbing rents

Property prices in London have turned downwards, with inner‑city values dropping 8.7% year‑on‑year while outer boroughs fell 2.6%. The average price in inner London is now £687,415 versus £518,655 in outer areas. The flat segment is hit hardest, with inner‑London flats 11.2% below their April 2020 level. Analysts cite higher mortgage rates, the end of the Help‑to‑Buy scheme, higher stamp‑duty for overseas buyers and upcoming mansion‑tax proposals as contributing factors.

At the same time, rents are climbing across the capital. Average monthly rents have risen to above £2,200, with a 2.2% rent‑inflation rate. The steepest annual increases were recorded in Bromley (4.9% to £1,705), Richmond‑upon‑Thames (4.7% to £2,228) and Islington (4.4% to £2,537). Kensington and Chelsea now command the highest average rent at £3,569. "London is the only region of the UK which has registered an increase in demand for rented homes which is 6% higher than a year ago," said Zoopla director Richard Donnell, attributing the pressure to higher mortgage costs that keep first‑time buyers in the rental market longer.