House prices are falling across the majority of London and the South East, according to the latest Zoopla House Price Index, which shows price reductions concentrated in southern England while many other regions continue to record gains.
Regional split widens as southern markets soften
Zoopla’s data indicates that roughly four out of five properties in London and the South East are located in postcode areas where values have declined. Nationally, the share of homes in areas with falling prices has climbed to more than one third — up sharply from about 12% a year earlier.
The picture is mixed across England. Outside the capital and the South East, prices have in many cases continued to rise; the North West is currently leading regional growth with average prices around £6,600 higher than a year ago, Zoopla reports. But overall transaction volumes are weaker: the number of home sales has slipped by about 7% over the past year while supply has increased by a similar margin.
Industry: mortgage costs and more choice are shifting the market
Market commentators say rising borrowing costs have changed buyer behaviour, giving those looking to buy greater negotiating power. Richard Donnell, Executive Director at Zoopla, highlighted that higher mortgage costs are reshaping buyer priorities and pricing dynamics.
“The extra cost of mortgages has made home buyers more selective while greater choice of homes for sale has increased the scope to negotiate on price,”
He added that well‑priced and well‑presented properties continue to sell briskly, and that a reduction in mortgage rates below 5% would be the most significant factor to revive activity.
Other industry voices voiced similar concerns. Tom Bill, Head of UK Residential Research at Knight Frank, warned sellers must reflect the tougher mortgage environment when setting asking prices and noted that geopolitical tensions are adding to borrowing cost pressures. Nathan Emerson, chief executive of Propertymark, also commented on the market headwinds.
Budget measures and schemes to support buyers
Zoopla identified elements of the recent Budget that could help the market in southern England. Reform to the 5% Stamp Duty band was singled out as a potential support, and the government’s Your First Home scheme could assist up to 10% of first‑time buyers, according to the platform.
Zoopla’s analysis suggests any move that eases mortgage costs would have the greatest positive impact, but that near‑term strength will depend on how quickly rates ease and on buyer confidence.
What this means for London homeowners and buyers
For sellers in London and the South East, the data implies pressure to adjust asking prices and to invest in presentation. For buyers, increased choice can mean better opportunities to negotiate, though many face higher monthly costs because of elevated mortgage rates.
- Sellers: may need to price more competitively to attract offers.
- Buyers: face higher borrowing costs but wider choice could improve negotiating positions.
- First‑time buyers: could benefit from targeted government schemes, though availability may be limited.
Practical considerations for those transacting now include securing mortgage approval in principle early, budgeting for higher monthly repayments, and instructing estate agents who can benchmark pricing accurately in a softer southern market.
Data snapshot
| Indicator | Change |
|---|---|
| Share of homes in falling-price postcodes (London & South East) | ~80% |
| Share of homes in falling-price postcodes (national) | >33% (up from ~12% year-on-year) |
| Change in home sales (year) | -7% |
| Supply change (year) | +7% |
For Londoners, the takeaway is clear: the southern market has moved from relative buoyancy to a period where pricing discipline and mortgage affordability matter most. Policymakers and lenders may influence the pace of any recovery, but in the short term it is elevated borrowing costs and a deeper choice of properties that are dictating outcomes at the kitchen table and in estate agency windows across the capital and its surrounds.
Amid the regional divergence, sellers and buyers alike will be watching mortgage rates and any further policy announcements closely, as those factors will determine whether autumn stabilises into recovery or further price adjustments lie ahead.
