Prime London is cooling, bridging is booming and buyers are haggling harder as movers fight to keep chains alive
London's housing market is increasingly splitting in two, with weakness concentrated in prime and central districts while more affordable areas inside and outside the capital continue to post modest growth.
Regional brokers report that prices are still rising across much of the UK, but buyers are becoming more selective and less willing to accept “optimistic” asking prices.
“In our core patch across South Leicestershire, Northamptonshire and Bedfordshire house prices continue to rise, with some figures suggesting increases of between 4-6% in 2025,” said Marc Finch, director at Forever Home Mortgages.
“There’s been more stock available and that’s led to buyers having a bit more confidence to haggle against any property priced optimistically. Valuations during the application process have held firm with very few down valuations.”
Finch added that it is home movers rather than first‑time buyers who are feeling the greatest strain from higher prices and still‑elevated rates. Upsizers, in particular, are finding it harder to balance higher monthly payments with affordability contraints, while first-time buyers appear comparatively undeterred.
Prime London comes under pressure
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By contrast, London has been the weakest-performing UK region for house prices this year, with declines concentrated in prime and higher-value segments.
Guy Nyirenda of Altura Mortgage Finance said valuations in central and premium London zones have dampened over recent months, prompting some clients to delay sales or remortgages. “[Those] that do not have an urgent requirement to transact right now [are waiting] for better valuations in 2026,” he reported.
ONS figures show that values declined over the past year in more than half of the capital’s boroughs, even as the national market recorded modest growth. Declines have been most pronounced in London’s highest-value areas: 18% in the City of London, 16.5% in Kensington and Chelsea, and a similar drop in Westminster.
In Kensington and Chelsea, average values have now slipped to around £1.19m — a level last seen more than a decade ago and significantly below the market’s mid-2010s peak.
More affordable outer London boroughs tell a different story. Barking and Dagenham, Bromley and Lewisham, and Havering have all posted gains, with prices in several districts reaching new highs during the Autumn.
Speaking to the Financial Times, Knight Frank’s head of UK residential research, Tom Bill, described London as a “two‑speed market”, with prime areas more exposed to stamp duty, political risk and global uncertainty, while demand remains resilient in lower-priced pockets.
Negotiations harden, bridging rises
On the frontline of transactions, brokers report that London’s divergence is translating into tougher negotiations, price reductions and a rise in bridging finance to preserve chains.
“Conditions are shifting bargaining power toward buyers in certain segments,” said Rikesh Tailor of Mortgage Knight. “I am seeing harder negotiations during the initial process and some instances of price reductions at the later stages.”
“Both buyers and sellers seem to be engaged to ensure the sale goes through,”
In one transaction, a seller cut their asking price by £50,000 to secure an onward purchase, after successfully renegotiating their own offer by the same amount.
Bridging finance has become more common, Tailor added, but as a tool of certainty rather than speculation. “Clients [are using brdiging when] their existing property hasn't sold and they have found a new property that they do not want to lose.”
The drag of fiscal headwinds
READ MORE: London’s super-prime market logs weakest year since Covid – but deals still being done
Prime London is also adjusting to a less-than-favourable fiscal environment following measures unveiled in the Autumn Budget, which disproportionately affect higher-value homes.
Under the new framework, properties valued above £2m will be subject to an additional levy that functions in practice as a mansion tax, alongside a new supplement applied through the council tax system. Rather than replacing existing bands, the changes layer extra costs onto the most expensive homes, increasing the ongoing burden of ownership in prime areas.
The council tax surcharge will start at £2,500 a year for properties valued between £2m and £2.5m, rising progressively to £7,500 for homes worth £5m or more. Treasury estimates suggest the measures will generate approximately £400m annually by the end of the decade, with proceeds directed to central government rather than retained locally.
From post‑crisis boom to post‑Brexit stagnation
Analysts suggest the current malaise in London's prime market is the latest phase of a longer cooling following a post‑financial crisis boom and the UK’s decision to leave the EU.
Richard Donnell, executive director at Zoopla, told the FT that after the financial crisis “everyone wanted to be in London, investing in London” as prices surged. But since the Brexit referendum, he argued, London values have “gone nowhere”, describing the vote as a “boom‑bust sea change moment for London as a place to do business, as a global city”.
Knight Frank’s Tom Bill said that, on the international stage, “London’s perhaps lost some of its appeal” since Brexit, while price growth in prime districts has been constrained by already‑high values and tighter mortgage regulation.
Outlook for 2026: modest growth nationally, flatlining London
Brokers and forecasters expect the UK housing market to remain highly segmented in 2026, with London once again underperforming the national picture.
Research from Rightmove suggests that London house prices will rise by just over 1% next year, compared with average growth of 2–3% across the UK.
In many regional markets, prices continue to edge higher and mortgage valuations remain firm despite stretched affordability.
In London’s higher-value areas, however, slower price growth and lower valuations are driving tougher negotiations and greater reliance on bridging finance as buyers and sellers prioritise completing transactions over waiting for a rebound.
