House prices in London's most affluent boroughs, including Westminster and Kensington and Chelsea, plunged at double-digit annual rates for the fifth consecutive month, erasing a decade of gains. Average prices in Westminster dropped 12.7% year-on-year to £872,000, while Kensington and Chelsea fell 11.2%, nearing 2013 levels. The City of London mirrored this trend with an identical 11.2% decline, pushing inner London's overall prices down 5.6% in February—the sharpest drop since 2009.

Experts cite stricter tax policies, including reduced incentives for foreign investors and higher stamp duty rates, as primary drivers. The Middle East conflict exacerbated the downturn by triggering inflation and higher mortgage rates, further dampening buyer confidence. Analysts note London's reliance on flats, which fell 6.1% annually, contrasts with the UK's 2.6% flat market decline, amplifying the capital's weakness.

Regional disparities highlight London's unique struggles: while the UK average rose 1.2% to £268,000, Yorkshire and the North East saw 3.9% and 3.6% gains. London's flat dominance, coupled with elevated unemployment (7.4%) and stagnant population growth (2.2% since 2019), underscores systemic challenges. Semi-detached homes, however, gained 2.9% nationwide, offering a sliver of resilience.

This historic slump signals a seismic shift in London's property dominance, with tax reforms and global instability reshaping investment patterns. As prices retreat to pre-2013 levels, the market's recovery hinges on stabilizing geopolitical risks and easing affordability pressures.