London house prices fell for the second month in a row in September, dropping £7,000 to £556,000, as buyers hold back amid fears that the upcoming Budget could introduce a “mansion tax”. It remains the only UK region with an annual price decline, down 1.8%, according to the ONS.

Speculation around a tax on England’s 300,000 most expensive homes — likely to hit properties in the top three council tax bands — has unsettled the capital’s market. Sales of £5m+ homes have reportedly plunged 65%, and demand for properties over £500,000 is down by up to 9% compared with last year.

Across England, most regions also saw prices slip in September, with the North East recording the sharpest fall. The average sale price dropped £3,000 from its peak to £296,000.

Analysts warn that activity may remain subdued until after the Budget. A light-touch approach could spark a rebound, while stronger tax measures may mean a sluggish start to 2026.