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London mansion prices are falling in prime areas like Kensington and Westminster as tax changes and fewer international buyers weigh on the market.
London mansion prices are falling across prime areas of the capital as wealthy buyers desert the market, according to estate agents and property analysts. In South Kensington, a Georgian house with a full-width balcony steps from the Natural History Museum and the V&A is struggling to sell, while a nearby property originally listed at £20m was cut to £14m this year.
The trend marks a sharp reversal for a market that for decades saw London house prices race ahead of the national average. According to Nationwide, the average UK house price rose by about 2% in the year ended in June, but prices in inner London have been falling, with the gap between the capital and the rest of the country slowly narrowing.
Prime London Prices Fall Sharply
The drop has been particularly pronounced in Westminster, which includes Marylebone, Belgravia and Mayfair, where prices fell 25.4% year on year. In the City of London, prices slumped by 20.4%, and in Kensington and Chelsea they fell 14.7%.
In Notting Hill, a stucco-fronted property that came to market two years ago at £16m is now offered for less than £14m, a local estate agent said. In Knightsbridge, bordering Hyde Park and home to Harrods, a flat on Pont Street that sold for £4.4m in 2014 later sold for £3.5m and can now be bought for £2.5m, according to Harry Dawes, a buying agent based in Belgravia.
Anthony Payne, chief executive of the data analyst LonRes, said properties in the capital became overvalued in the mid-2010s after a period of rapid price growth. London was then hit hard by Brexit, the Covid pandemic, higher property taxes and a surge in borrowing costs.
Tax Changes Deter Wealthy Buyers
Owners who bought at the peak now face losses of as much as 25% if they choose to sell, according to estimates from the estate agent Savills. Payne said London benefited dramatically from international investment and buyers who wanted property as a store of wealth, but that more and more of them are now deserting the market.
Jeremy Gee, managing director at the super-prime estate agent Beauchamp Estates, whose portfolio includes a £42m sub-penthouse overlooking Hyde Park, said the decline was partly driven by the exit of super-wealthy groups from the UK, especially after the abolition of the non-dom tax regime. He said a section of society has left the UK recently for many reasons, mainly tax.
Gee added that tax changes have put sellers on edge. Last year, the former chancellor Rachel Reeves announced plans for a measure that added to nervousness in the market. Gee said that with a Labour government the concern is always that some kind of wealth tax may appear, though many wealthy people simply accept the cost of taxation and that London is an expensive city to live in.
Slower Sales and Wider Discounts
The nervousness has triggered a slowdown across the higher tiers of London's market. Prime properties spent an average of 186 days on the market in the first half of 2026, up from 178 days in the first half of 2025, according to LonRes. Over the same period, the average discount to asking price widened from 8.3% to 10.4%, meaning sellers have grown more likely to accept lowball offers.
Dawes said sellers, who normally own these properties for at least a decade, do not like the situation but have to accept it. He said older sellers have to take a lifetime view on their property and accept that the last trade might not look good from a profit and loss perspective. He added that his firm bought three flats for a client's children last year, two in Chelsea and one in Notting Hill, and every seller was selling at a loss.
Stuart Bailey, head of super-prime London sales at the estate agent Knight Frank, said there are still buyers willing to pay above the asking price for the very best in class properties, with a fabulous address, lovely views, immaculate style and recent refurbishment. He said it is a matter of premium or discount, retail or trade, brand new or not, with nowhere in between, and that discounted properties are dragging the market down. Sellers are becoming more realistic about moving on and do not see material price growth on the horizon, he added.
International Demand Remains Selective
Camilla Dell, a buying agent, said demand is still strong from a wide base of international buyers, including Americans, Singaporeans and Nigerians. She said politics rarely comes up in conversation with such buyers.
The prime London market remains a world away from the rest of the UK property market and from much of the capital, where Londoners struggle to get on to the housing ladder. The contrast highlights how the top end of the market has cooled while broader affordability pressures persist.
London Property Market Prime London Kensington And Chelsea Westminster Non-Dom Tax Regime Lonres Savills
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