London House Prices Fell 3.7 Percent, the Only English Region Down
Reports of a Middle East led surge in London’s luxury housing market and the official price data are measuring two different things, and only one of them is a comprehensive record of what property actually sold for. HM Land Registry’s UK House Price Index for May 2026, published on 22 July, records London house prices down 3.7 percent over twelve months, taking the average property to 544,814 pounds. The bulletin describes London as “the English region with the lowest annual inflation, where prices decreased by 3.7% in the 12 months to May 2026.” London also registered the largest monthly fall of any region, at 1.2 percent.
Every other English region rose. The North East led at 5.9 percent, followed by the North West at 5.7 percent, Yorkshire and The Humber at 4.0 percent, the East Midlands at 3.1 percent, the West Midlands at 2.4 percent, the East of England at 2.3 percent, the South West at 1.6 percent and the South East at 1.3 percent. Across the United Kingdom the average price was 271,000 pounds, up 2.7 percent, and across England 292,095 pounds, up 2.3 percent. London is the only entry in the English regional table with a negative annual reading.
The declines are steepest at exactly the end of the market recent coverage has described as buoyant, but they are also least reliable there, and both halves of that sentence need saying.
Annual change by English region, twelve months to May 2026
| Region | Annual change |
|---|---|
| North East | +5.9 percent |
| North West | +5.7 percent |
| Yorkshire and The Humber | +4.0 percent |
| East Midlands | +3.1 percent |
| West Midlands | +2.4 percent |
| East of England | +2.3 percent |
| South West | +1.6 percent |
| South East | +1.3 percent |
| London | −3.7 percent |
| England, all regions | +2.3 percent |
| United Kingdom | +2.7 percent |
The five steepest London borough declines
| Borough | Average price, May 2026 | Annual change | Approximate cash fall |
|---|---|---|---|
| City of London | 626,980 pounds | −28.1 percent | about 245,000 pounds |
| City of Westminster | 836,331 pounds | −22.8 percent | about 247,000 pounds |
| Tower Hamlets | 444,332 pounds | −14.5 percent | about 75,000 pounds |
| Hammersmith and Fulham | 729,407 pounds | −10.9 percent | about 89,000 pounds |
| Kensington and Chelsea | 1,255,567 pounds | −10.7 percent | 150,161 pounds |
Benchmark figures
| Metric | Figure |
|---|---|
| London average price, May 2026 | 544,814 pounds |
| London monthly change, April to May | −1.2 percent |
| London annual change, cash purchases | −6.4 percent, average 575,650 pounds |
| London annual change, mortgaged purchases | −2.9 percent, average 538,729 pounds |
| England average price | 292,095 pounds |
| United Kingdom average price | 271,000 pounds |
| Kensington and Chelsea, May 2025 | 1,405,728 pounds |
| London annual change, April 2026, as revised | −2.3 percent |
Input figures are from HM Land Registry’s UK House Price Index for May 2026, published 22 July 2026, including the summary, England, London borough and funding status tables. Cash falls other than the exact Kensington and Chelsea figure are our own calculation from the published prices and percentage changes.
The numbers behind the decline
The cash figures make the scale legible in a way percentages do not. On our calculation an annual decline of 3.7 percent implies a London average of about 565,700 pounds a year earlier, so the typical London property lost roughly 20,900 pounds of value over twelve months. The single monthly fall of 1.2 percent is worth about 6,600 pounds on the May average, which means roughly 32 percent of the entire annual decline occurred in one month.
Kensington and Chelsea, the most expensive local authority in England, fell from 1,405,728 pounds to 1,255,567 pounds, a loss of 150,161 pounds in twelve months, equivalent to about 12,500 pounds a month or roughly 411 pounds a day, on our calculation. It trades at about 2.30 times the London average and about 4.30 times the England average. It is not, however, the steepest fall in the table: four boroughs declined by more in percentage terms and two by more in cash terms, on our calculation.
The regional spread is unusually wide. The gap between the strongest English region and London is 9.6 percentage points. The unweighted average annual change across the eight positive English regions is about 3.3 percent, placing London roughly 7.0 points below the rest of England, on our calculation. London’s premium over the England average now stands at about 86.5 percent and over the UK average at about 2.01 times, both compressed by a year in which the capital fell while everything around it rose.
The split by financing method points the same way at the more liquid end. Prices paid by cash buyers in London fell 6.4 percent year on year against 2.9 percent for mortgaged purchases. Cash status is not a proxy for nationality or for wealth, but the wider fall among unmortgaged buyers is directly relevant to any claim that internationally mobile capital is supporting London prices.
A trend, not a month, and a caution about the boroughs
The direction is well established. The Office for National Statistics, in its Private rent and house prices bulletin released on 17 June covering April, stated: “This is the ninth consecutive month in which London has seen an annual fall in house prices,” with April at −2.1 percent. The 22 July index subsequently revised April to −2.3 percent and put May at −3.7 percent, making May the tenth consecutive month and widening the decline by 1.4 points in a single month. It is accelerating, not bottoming.
The borough figures require more care than the regional ones, and HM Land Registry says so in terms: “Low numbers of sales transactions in some local authorities and London boroughs, such as City of London, can lead to volatility in the series,” and “Geographies with low number of sales transactions should be analysed in the context of their longer term trends rather than focusing on monthly movements.” The two largest declines in the table are in precisely the boroughs named as volatility prone. A −28.1 percent print for the City of London is a statistical artefact of a very small sample as much as it is a market signal, and should be read as such. The regional figure, London down 3.7 percent while every other English region rose, is the robust one.
None of this speaks to the composition of demand at the very top of the market, where transaction counts are small and Gulf buyers have long been an established and substantial presence. Agency reports of activity among a narrow group of wealthy international purchasers and an index showing broad price weakness are not contradictory; they measure different things and can move in opposite directions at the same time. What the official data do show is that any such buying had not, by May, been sufficient to reverse the decline in realised London prices.
Why it matters: For Gulf investors with London exposure, the relevant number is not the count of transactions at the top of the market but the direction of realised prices, and that direction has been negative for ten consecutive months. A buyer entering prime central London today is entering a market that has repriced materially over a year: a better entry point than it was, and a worse mark for anyone already holding. Both readings follow from the same data, and neither is captured by coverage framing the market as booming. The wider point is one of method: agency sourced transaction counts at the very top measure activity among a small number of buyers, while the official index measures price across the whole stock, and reporting the first as though it were the second produces exactly the error at issue here.
Outlook: Three markers for the second half. First, whether London’s annual decline stabilises or continues widening: the April to May move went the wrong way, and a further widening would establish a trend rather than a run. Second, the prime central boroughs, where any turn would show first, though the volume caveat means several months of consistent direction will be needed before a turn can be called. Third, the policy calendar: the autumn Budget is the next scheduled event with the capacity to move the top of the market in either direction, and uncertainty ahead of it has historically weighed on transaction volumes at precisely this end.
Sources: HM Land Registry, UK House Price Index, May 2026; Office for National Statistics, 17 June 2026. Derived calculations are our own.
