London Property Market Records First Annual Price Fall Since Spring 2024
For the first time in a year and a half, house prices in London have recorded an annual fall, according to fresh data. The decline, which also affected southern regions, has been attributed to budget uncertainty and a significant increase in property supply.
Budget Speculation Dampens Buyer Demand
New figures from the property portal Zoopla reveal that London house prices fell by 0.1 per cent in the year to November 2025. The surrounding areas felt a similar pinch, with the south east and south west seeing drops of 0.1 per cent and 0.2 per cent respectively.
The data points directly to pre-Budget jitters as a primary cause. UK-wide buyer demand dropped by 12 per cent year-on-year, a slump that Zoopla links directly to speculation about potential new property taxes. Rumours of an annual levy on homes valued over £500,000 caused particular instability in the capital, where more than half of all properties would have been affected.
A Sigh of Relief and Lingering Questions
The actual Budget announcement brought some reprieve. Instead of a sweeping annual tax, the Treasury decided to implement a council tax surcharge on homes valued over £2 million.
Richard Donnell, Executive Director at Zoopla, commented, “The Budget bark was worse than the Budget bite for the housing market. Home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer. Our data shows the underlying demand to move home remains strong.”
This sentiment was echoed by Tom Bill, head of UK residential research at Knight Frank, who stated that the post-budget clarity should “allow demand to bounce back following months of speculation.”
However, analysts warn that the new surcharge, while less severe than feared, still poses challenges. There are concerns it will impact middle-class Londoners who have seen their property values soar over the last twenty years.
Bill highlighted ongoing uncertainties, noting, “Until it is introduced in 2028, buyers and sellers face uncertainty around price thresholds and even once valuations are completed, they could be challenged, which would prolong the limbo.” He also predicted that over time, the tax net would capture more typical London homes like terraced houses, flats, and semi-detached properties.
