Should you buy real estate in London now?

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Is London property cheap enough to buy now?

London property is more attractive to buy now than it was a couple of years ago, but calling it cheap would be a stretch.

The latest official figures put the average London home at roughly £554,000, down 2.5% from a year earlier. London has now posted annual price declines for ten consecutive months, while average prices across England are still 1.8% higher.

More recent market data point in the same direction. Zoopla has London prices down around 1% year on year. Rightmove's latest asking-price index is weaker again, with the average London asking price at about £646,000, down 3.1% in a year and 4.4% over the latest month measured.

Those datasets are measuring different stages of the market, so we should not expect identical numbers. What is striking is that all three show London underperforming.

Affordability is still the obvious problem. The ONS puts London house prices at roughly 10.6 times median full-time earnings, more than twice the five-times-earnings level it uses as a broad affordability reference.

So buyers today are getting a weaker market rather than a genuinely inexpensive one. £554,000 remains a huge amount of money for the average household, but sellers have far less freedom to demand whatever price they want.

Measure	Latest London reading	Annual change	What we learn
Average completed-sale price	~£554,000	-2.5%	London prices are falling
Zoopla price index	—	~-1.0%	More recent agreed sales remain weak
Rightmove asking price	~£646,000	-3.1%	Sellers are lowering expectations
Price-to-earnings ratio	~10.6×	Still extremely high	London remains expensive

Why are London house prices falling more than the rest of Britain?

London house prices are struggling because today's mortgage rates hurt expensive markets much more than cheap ones.

Zoopla estimates that higher mortgage rates have cut a typical buyer's purchasing power by about 9% since the start of the year. Its calculation compares a five-year fixed mortgage rate of around 4% earlier in the year with roughly 4.8% lately.

The national percentage applies everywhere, but the cash effect is very different in London. Zoopla estimates that a London buyer would need around £35,500 more deposit to buy the same property without increasing monthly repayments. The equivalent national figure is only about £18,200.

That gap explains a lot of London's weakness.

The latest Bank of England figures also show fewer people managing to convert demand into actual purchases. Mortgage approvals for house purchases dropped to 56,100 in July, compared with an average of about 60,800 during the previous six months. The effective interest rate on newly drawn mortgages rose to 4.45%.

Meanwhile, Zoopla's latest data have London prices down around 1%, while the North West is still up 3.1%.

People have not suddenly stopped wanting London homes. Many simply cannot finance the price sellers were previously expecting.

Are London buyers finally in control?

Yes, London buyers currently have much more negotiating power, especially when a property has been sitting unsold for months.

Rightmove says London homes now take about 73 days on average to find a buyer, longer than every major UK region except the South West. Its latest asking-price data also show the sharpest monthly fall in the country.

Prime London gives us an even clearer picture.

According to LonRes, new sales instructions in July were 26.2% above the normal pre-pandemic level for that month. More than half of the prime London homes that sold had already had their asking price reduced at least once.

The average eventual discount from asking price reached 10.4%.

We should not take that 10.4% number and automatically bid 10% below every London listing. Prime London behaves differently from a £450,000 flat in Newham or a £600,000 house in Bromley.

The more interesting number is how the discount changes with time.

Homes that sold within three months accepted an average discount of 3.9%. Properties taking more than 12 months to sell eventually accepted 19.3%.

That tells us where to look. A good property that has been sitting on the market because the owner started with an unrealistic price can be much more interesting today than a fresh listing whose seller has not yet adjusted to the new market.

Prime London sale speed	Average discount from asking
Sold within 3 months	3.9%
Overall prime London average	10.4%
Sold after more than 12 months	19.3%

Should you wait for London mortgage rates to fall?

Waiting for cheaper London mortgages can make sense for a stretched buyer, but waiting is much less obvious if you already have a large deposit.

Mortgage rates are still doing real damage to affordability. Zoopla's representative five-year rate is around 4.8%, while the Bank of England says the effective rate actually paid on newly drawn mortgages recently reached 4.45%.

Take London's roughly £554,000 average property price. With a 25% deposit, the mortgage would be about £415,500. At 4.8% over 27 years, that comes to roughly £2,290 a month before insurance, service charges or maintenance.

A meaningful fall in mortgage rates would obviously help.

The risk in waiting is that mortgage rates and purchase prices do not move independently. Cheaper credit allows buyers to bid more. Zoopla is already seeing searches for homes running 7% ahead of last year nationally even though agreed sales remain 6% lower.

London should be especially sensitive to any mortgage-rate improvement because first-time buyers here are among the most stretched borrowers in Britain.

We therefore would not delay a good ten-year purchase simply because a mortgage might become cheaper next year. Someone already borrowing close to the maximum their income allows has a much stronger reason to wait.

Is buying a London home cheaper than renting now?

Buying a London home with a large mortgage can currently cost more each month than renting, so the decision only starts to look compelling when you plan to stay for years.

The average London private rent is now about £2,317 a month, according to the latest ONS data.

Our mortgage example on an average £554,000 home comes to roughly £2,290 a month with a 25% deposit and a 4.8% rate over 27 years. On the surface, the two numbers are almost identical.

Ownership then adds maintenance, buildings insurance, conveyancing costs and, for many London flats, service charges. The buyer also needs £138,500 for the deposit in that example.

Stamp duty pushes the upfront bill higher again.

The comparison becomes more favourable to buying when we extend the holding period because part of each mortgage payment reduces the loan. Rent builds no ownership. A buyer can also eventually refinance if mortgage rates fall, whereas a tenant remains exposed to future rent increases.

For someone who may leave London in two or three years, renting is still very hard to beat.

For someone fairly certain they will stay for ten years, today's softer prices deserve much more attention.

Average London example	Approximate amount
Property price	£554,000
25% deposit	£138,500
Mortgage	£415,500
Mortgage at 4.8% over 27 years	~£2,290/month
Average private rent	~£2,317/month
Standard stamp duty	~£17,700

Is London buy-to-let property still worth it?

London buy-to-let can still work today, but a heavily mortgaged landlord buying an average property at an average price has very little room for error.

Zoopla estimates London's average gross rental yield at about 5.1%. Barking and Dagenham is closer to 6.2%, Newham about 6.0% and Bexley roughly 5.8%.

Those numbers sound respectable until we compare them with financing costs.

A gross yield slightly above 5% sits uncomfortably close to mortgage rates around the same level. And "gross" means before repairs, insurance, void periods, letting-agent fees, service charges and tax.

The citywide numbers illustrate the problem. An average £2,317 monthly rent produces £27,804 a year. Against a £554,000 purchase price, that works out at almost exactly a 5% gross yield.

The landlord then has to absorb the operating costs.

Regulation has also become more demanding. Since the Renters' Rights Act changes took effect this year, Section 21 no-fault evictions have disappeared, most private tenancies have become periodic, rent increases are more tightly structured and tenants have gained stronger protections.

Yet rental demand has hardly disappeared. London rents recently rose 3% annually to £2,317 a month, and prime London rents were up 5.3% according to LonRes.

That combination creates a fairly clear investment profile. Cash buyers and investors finding yields around 6% can still make London work. Buying a low-yield central flat with expensive debt is much harder to justify.

Rental market	Approx. gross yield
London average	5.1%
Barking & Dagenham	6.22%
Newham	6.0%
Bexley	5.8%

Will London's housing shortage push property prices higher again?

London's housing shortage gives property owners a powerful long-term advantage, but it cannot force prices higher while buyers are struggling to borrow.

The latest draft London Plan puts the city's housing need at 84,884 new homes a year.

London has historically delivered only about 30,000 to 45,000 homes annually over the past decade. Even using the stronger end of that range leaves a shortfall of roughly 40,000 homes a year against today's assessed need.

The near-term construction data look worse.

JLL's analysis of Molior data found that only 5,547 private homes started construction in London during 2025, down from 33,782 a decade earlier. That is an 84% collapse in private-sector starts.

Affordable housing is struggling too. The London Assembly says the 2021–26 Affordable Homes Programme had delivered 14,335 starts by March, missing its revised target of 17,800 to 19,000.

The shortage helps explain how London can have falling property prices while rents still rise. Households still need somewhere to live, but expensive mortgages stop part of that demand from reaching the sales market. It spills into renting instead.

Over a decade, building tens of thousands fewer homes than London needs should support existing property values. Over the next twelve months, mortgage affordability can easily matter more.

London housing supply	Approximate level
Current assessed annual housing need	84,884 homes
Typical annual delivery over past decade	30,000–45,000
Implied annual gap	~40,000–55,000
Private homes started in 2015	33,782
Private homes started in 2025	5,547
Change in private starts	-84%

Are London flats a bargain now?

Some London flats are finally becoming interesting again, although cheap-looking flats with high service charges can still be terrible purchases.

Flats have been one of the weakest parts of the British housing market. The latest official data for England show flat and maisonette prices down 2.3% annually while semi-detached homes rose 3.2%, terraces 2.8% and detached houses 2.0%.

That divergence matters in London because flats make up such a large share of available housing.

A weaker flat market gives buyers more negotiating room, especially in buildings where investor demand has disappeared. It also creates opportunities for owner-occupiers who were previously priced out of the area they wanted.

The catch is that two flats with the same £450,000 asking price can have completely different economics.

One might have a £1,500 annual service charge, a long lease and little planned maintenance. Another might charge £5,000 or £6,000 a year for a concierge, gym, lifts and communal facilities. A landlord receiving £24,000 of annual rent loses a quarter of that income before financing or repairs if the service charge alone is £6,000.

We would be particularly cautious with new-build apartments carrying premium service charges and large numbers of nearly identical units. Those units can be easy to buy and surprisingly difficult to resell.

Older flats in good locations with sensible management, clean leases and modest running costs look much more interesting today.

Is Prime Central London finally a bargain?

Prime Central London has become one of the most heavily discounted parts of the market, and serious long-term buyers have far more reason to look today than they did a few years ago.

LonRes says achieved prime London prices fell 7.9% in a year and now sit 5.7% below their 2017–2019 average.

The earlier quarterly decline was 7.5%, the sharpest since 2009.

Official borough figures look even more dramatic. Westminster prices were 25.4% lower than a year earlier, Kensington and Chelsea was down 14.7%, Hammersmith and Fulham 13.3% and Islington 8.1%.

We would treat those borough figures carefully because a relatively small number of very expensive transactions can move the average violently from one period to another. LonRes provides the stronger confirmation because its price-per-square-foot data also show a broad decline.

The £5 million-plus market remains especially unusual. Available stock is lower than last year, yet it is still 61.8% higher than five years ago. Transactions recently fell 20% year on year.

So a wealthy buyer who already wants Kensington, Chelsea, Belgravia or Mayfair can negotiate in a market that has been repricing for years.

The mistake would be assuming that a large decline automatically guarantees a large rebound. Prime London has already shown that prestigious property can stay below previous valuations for a very long time.

Is Outer London a safer property investment than Central London?

For most buyers today, a well-connected Outer London property offers an easier investment case than an expensive central flat.

The latest borough data show how different the two Londons have become.

Barking and Dagenham prices rose 4.3% over the year. Havering gained 3.9%, Redbridge 3.6%, Kingston 2.9%, Haringey and Waltham Forest both 2.5%.

Meanwhile, Westminster dropped 25.4%, Kensington and Chelsea 14.7%, Hammersmith and Fulham 13.3% and Tower Hamlets 13.1%.

Outer London buyers also get more housing for the same money. The average property in Barking and Dagenham is about £371,000 compared with roughly £854,000 in Westminster and £1.25 million in Kensington and Chelsea.

Rental yields tend to improve as prices fall too. Barking and Dagenham's roughly 6.2% gross yield is considerably more forgiving than the low yields available on many prime properties.

We would still avoid treating the whole of Outer London as one market. Transport links, schools, local supply and property type matter enormously.

But a normal house or flat near a useful station usually has a broader resale audience than an investor-heavy development containing hundreds of interchangeable apartments. In a slow market, that liquidity is worth paying attention to.

London borough	Average price	Annual change
Barking & Dagenham	~£371,000	+4.3%
Waltham Forest	~£523,000	+2.5%
Greenwich	~£465,000	-0.5%
Camden	~£833,000	-7.1%
Hammersmith & Fulham	~£726,000	-13.3%
Kensington & Chelsea	~£1.25m	-14.7%
Westminster	~£854,000	-25.4%

Does stamp duty make London property too expensive to buy?

Stamp duty makes short-term London property purchases painfully expensive, particularly for investors and overseas buyers.

At London's average £554,000 purchase price, a UK resident buying a main home would pay roughly £17,700 in Stamp Duty Land Tax under the current bands.

An additional-property buyer pays the five-percentage-point surcharge on top. The bill rises to about £45,400.

A buyer subject to the non-resident surcharge pays another two percentage points. Someone hit by both the additional-property and non-resident rates would therefore pay roughly £56,500 on that £554,000 purchase.

That is already more than 10% of the property's value.

Add conveyancing, surveys, possible mortgage fees and the eventual cost of selling, and flipping a London property after two or three years becomes a difficult trade even if the price rises.

Someone staying ten or fifteen years can spread those costs across a much longer ownership period.

This is why holding period matters so much in London. The transaction tax punishes people who change their mind quickly.

Could London house prices still fall another 10%?

Some London properties could absolutely lose another 10%, while a citywide fall of that size would probably require a much nastier economic shock than we are seeing now.

Prime London has already shown that high-single-digit annual declines are possible. Several boroughs have registered double-digit falls. Flats remain weak, mortgages are expensive and the latest Bank of England data show purchase approvals falling below their recent average.

There is therefore no reason to assume today's price is the bottom.

The wider London market has stronger support than the weakest prime districts, though. Average prices are down 2.5% rather than 10%. Rents are rising again at about 3%. Private housing starts have collapsed, and London needs far more homes than it is building.

Buyer interest is also starting to return. Zoopla recently recorded home searches 7% above a year earlier nationally, their strongest annual increase for twelve months, even though agreed sales were still 6% lower.

Demand has started moving before transactions have fully recovered.

A renewed jump in mortgage rates or a serious employment downturn could send London prices materially lower. With broadly stable financing, we expect a slower and more uneven adjustment.

That still leaves plenty of room for a badly chosen flat to drop another 10%.

What kind of London property should you actually buy now?

The London properties we like today are boring ones: useful homes in established areas, near transport, with reasonable running costs and plenty of future buyers.

A two-bedroom flat that works for a couple, two sharers or a small family has several possible resale markets. A tiny investor studio does not.

A normal house close to a railway or Underground station has another advantage: supply is inherently limited. Developers can add hundreds of flats to a regeneration district, but they cannot easily reproduce established streets of houses near good transport.

For leasehold property, we would check the service-charge history rather than simply the current bill. A £2,000 charge that has doubled quickly can be more concerning than a stable £3,000 charge.

We would also look closely at how long the property has been listed and whether previous asking prices were cut.

As we saw above, prime properties selling after more than a year have recently needed discounts approaching 20% on average. That does not prove a stale property is cheap. It does show that time on market has become useful negotiating information.

The properties we would avoid are easier to identify these days: heavily marketed new builds priced above comparable resales, flats with unusually high service charges, properties whose investment case depends entirely on one regeneration story, and anything we would need to sell again within a few years.

So, should you buy real estate in London now?

Yes, we would buy London real estate now if the property is good, the price has been negotiated properly and we can comfortably hold it for at least seven to ten years.

London is giving buyers an unusual combination today. Official prices have fallen for ten consecutive months. Asking prices are being reduced. Buyers have more choice. Prime sellers are accepting large discounts. At the same time, construction has fallen to levels that look completely inadequate against London's future housing needs.

Mortgage costs are the main reason we would still say no to some buyers.

A household stretching its borrowing capacity to the limit gets very little protection from today's lower prices. A landlord buying a 4% or 5% gross-yield flat with expensive debt also has a weak setup. Foreign and second-home buyers face such heavy stamp duty that they need an especially good purchase price.

Cash buyers are in a much stronger position. So are owner-occupiers with large deposits who know they will stay in London for a long time.

We would be particularly interested in ordinary homes in established, well-connected areas and selectively in prime properties where the seller has already accepted that the old valuation no longer works.

We would be much less interested in prestige new builds, highly leveraged buy-to-let deals or anything bought mainly because "London always goes up."

The latest evidence gives us no reason to expect a rapid London-wide boom. Zoopla still has prices falling, mortgage rates remain close to 5%, and even the more optimistic demand indicators are only beginning to improve.

That is precisely why serious buyers have leverage today.

Our answer is therefore yes for a long-term buyer with strong finances, and no for anyone who needs the market to rescue a stretched purchase. Trying to call the exact bottom is unnecessary. Getting the property and the price right matters much more.

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INVESTROPA

A team specialized in real estate investing in European countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in London. If you’d like to learn more about us, you can check our presentation page.