London’s property market has long been a symbol of strength and steady growth. But for the first time in several years, price growth has stalled. House prices in the capital are no longer rising, and that signals a significant shift for developers, property owners, and insurance professionals alike.
Here’s what’s happening and what it means for the construction industry.
London House Prices at a Standstill
According to the latest figures from Halifax, average house prices in London remained flat in June 2025, with no month-on-month growth. This contrasts with a modest rise in other parts of the UK. London’s average property price now sits at £540,048, while the national average is £296,665
The Royal Institution of Chartered Surveyors (RICS) also reported that while sales enquiries have picked up, house prices overall remain flat, with London and the South East facing the greatest downward pressure.
This follows a 0.8% fall in UK-wide house prices in June, the largest monthly drop in two years. Experts believe London is now driving much of that slowdown.
What’s Behind the London Slowdown?
Affordability Challenges
London is one of the most expensive property markets in the world. With mortgage rates remaining high and tighter lending criteria in place, fewer buyers are able to meet affordability requirements. This has dampened demand and slowed transactions.
Recent Tax Changes
April’s stamp duty changes created a short-lived spike in activity, followed by a significant drop-off. Buyers rushed to complete before the new rates came in, creating an artificial dip in demand during the months that followed.
More Properties on the Market
There has been a marked increase in the number of properties for sale in London, with some estimates suggesting listings are up by nearly 20% compared to this time last year. More choice gives buyers greater negotiating power, which puts downward pressure on prices.
What About the Rest of the UK?
While London’s market has stalled, other parts of the UK are still seeing modest growth. For example, Northern Ireland and Scotland continue to post year-on-year price increases, albeit at a slower pace than during the post-Covid boom.
Nationwide’s latest report shows UK house prices are still up 1.4% annually, but with London being the weakest performing region.
What This Means for Developers and Insurers
If you’re involved in property development, construction, or building insurance, this shift in the London market could impact your work in several key ways:
Tighter Margins
Slower house price growth means reduced resale values. Developers may need to re-evaluate build costs, profit margins, and financing terms to ensure project viability.
Insurance Valuations
Insurers and lenders may request updated valuations or apply tighter criteria when underwriting new developments. This could affect everything from Contractors All Risk policies to structural warranty cover.
Sales Risk
Longer marketing periods and slower sales could increase the risk of properties sitting empty. Developers may need to look at Unoccupied Property Insurance or adjust their timelines and budget forecasts accordingly.
Greater Emphasis on Risk Management
With less market buoyancy to rely on, developers and contractors must take a more cautious, well-structured approach. Having the right insurance in place becomes even more critical.
How Construction Insure Can Help
At Construction Insure, we specialise in insurance for construction professionals, developers, and property investors. In a slower market like this, getting the right cover matters more than ever.
We can help you:
- Reassess valuations and risk exposure
- Adjust cover levels on active or planned developments
- Manage cover for unsold or unoccupied units
- Understand lenders’ changing insurance requirements
Whether you’re taking on a new project or need to revisit an existing policy, we’ll provide clear, expert advice to help you stay protected.
London house prices have stalled for the first time in years. With affordability stretched, tax changes biting, and more stock on the market, growth has hit a wall. For developers and construction professionals, this calls for a shift in strategy and a closer look at risk.
Staying ahead means adjusting to the market as it changes and making sure your insurance does too.
Need to review your insurance in light of changing property values?
Get in touch with Construction Insure today for expert guidance and tailored cover.