London’s housing market is divided, with prices in some boroughs soaring while others are in decline.
Prestigious central areas, such as Kensington and Chelsea, are witnessing significant price reductions, but some outer neighbourhoods are defying the downturn by achieving average house prices above £1 million.
The latest data from the Office for National Statistics (ONS) reveals that average property prices in Kensington and Chelsea fell to £1,263,000 in August 2025, a 7% decline on the year before.
This sharp downturn is corroborated by data from Rightmove, which recorded a 16% downturn in sold property prices in Kensington and Chelsea over the past year, 30% down on the 2022 peak of £2,577,485.
Industry experts attribute these declines to a complex mix of external factors, including recent tax reforms, ongoing economic uncertainties in the lead-up to the autumn budget, heightened property levies, and rising interest rates that limit borrowing capacity for buyers.
London’s new £1 million neighbourhoods
But in contrast to the declines seen in ultra-prime areas, South Hampstead, Ravenscourt Park, and West Putney have recently recorded average house prices exceeding £1 million, according to research by estate agent Savills reported in the Evening Standard.
The average house prices in these neighbourhoods are:
- South Hampstead, Camden: £1,007,872
- Ravenscourt, Hammersmith & Fulham: £1,223,973
- West Putney, Wandsworth: £1,351,501
This resilience is attributed to several factors including strong local school availability, relatively better value housing stock, and proximity to expensive hubs like St John’s Wood and Hampstead Village.
These areas appeal particularly to families prioritising more spacious homes and good schools, while still maintaining convenient access to London’s more established affluent districts.
And the trend suggests increasing demand for residential neighbourhoods that offer enhanced quality of life and connectivity, rather than the traditional prestige associated with central London locations alone.
Families seeking space and educational opportunities are driving the upward price movement in these pockets, even as the prime central London market contends with significant price corrections.
But beyond London’s varying sub-markets, the wider UK housing market remains comparatively robust.
Recent data from Halifax revealed that the UK housing market reached a new peak in October, with the average house price rising to nearly £300,000.
This marked a monthly increase of £1,647, or 0.6%, representing the strongest monthly rise since January.
Experts attributed this to sustained buyer demand, with many buyers opting for smaller deposits and longer-term mortgages, which is helping to maintain market activity.
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