London and South East house prices slip as mortgage rates rise

House prices across London and the South East declined in 22 of 31 postcodes during the year to September, according to data from property portal Zoopla. The areas examined represent about 85% of homes in the region, with only six postcodes seeing price gains and three remaining flat. Central London saw the steepest drop, with agreed sale prices falling nearly 6% in 2025.

Mortgage rates have risen sharply since the start of the year, adding several hundred pounds to monthly repayments. Moneyfacts data show that London borrowers faced an average monthly housing-cost increase of £215 since September, compared with £90 in the North East.

"Buyers in the South are more sensitive to rising borrowing costs because house prices are significantly higher than in other parts of the country," said Richard Donnell of Zoopla. He contrasted this with the North of England, where homes cost below the UK average and stamp-duty charges are lower.

Nationwide, 37 of 119 postcodes recorded falling prices, covering more than a third of all homes, up from 12% a year earlier. Price declines were also noted in parts of the South West, East of England, West Midlands and Wales, while no postcodes in the North of England or Scotland saw drops.

"Price growth has effectively ground to a halt this year and we expect the downward pressure to continue in the final months of the year, which may be aggravated by this week’s Budget," warned Tom Bill of estate agency Knight Frank.

Zoopla’s figures show the average London home price fell 1% year-on-year to £523,100, while the South East slipped 0.6% to £382,600. By contrast, the North West recorded a 3.2% rise, bringing its average to £211,400.

Donnell welcomed the government-backed first-time buyer scheme “Your First Home” but urged Chancellor John Healey to consider stamp-duty reforms to boost demand in the south, saying such changes could aid both buyers and sellers where transaction costs are highest.