Home prices in London dropped more than 15% at the end of 2017. This drop represents the largest decline in London’s residential market since 2009.

After a decade of soaring prices, London’s housing market now appears to be more exposed to political and economic uncertainty, interest rate increases and mortgage loan limits. And, according to Lucian Cook, head of residential research at Savills Place, “the London market (Britain’s most expensive market) will be the weakest performer in the country over the next five years.”

James Gibbons with Daunton’s in Pimlico believes that “…the uncertainty of Brexit is the issue.” Others believe that London’s slow growth and faster inflation rates are equally to blame. Whatever the cause or causes, London home prices declined -0.8% in January 2018 alone and this one indicator shows that the weakness in London’s housing market was present for much of last year as well.

Simon Aldous, a director with Savills, indicates that “lots” of real estate outlets in Central London have some action but that any offers coming in to purchase a house are “…often 10% below asking prices.”

London’s highest priced boroughs have, thus far, been the biggest losers in the midst of these declining home prices. Simultaneously, there has been a surge in expensive, recently built apartment buildings that are standing empty because Londoners either don’t want or can’t afford to buy.

Nationally, the Brexit vote has slowed growth and increased inflation while the Bank of England has added to this downward pressure by raising interest rates. Media coverage of the slowdown and falling home prices only exacerbate consumer confidence and nervousness. Even when you take London out of the equation, there was only a 2.5% increase in the annual housing forecast in January 2018, far short of price increases in recent years.

To confirm all this gloom and doom in London’s housing market, the London New Buyers Registry with Agents fell for the eleventh straight month in February 2018. Consumer spending was also down for nine out of ten months in February 2018. And, households in London spent the least on recreation since 2010.