London faces plunging home prices as remote work continues

The City of London is grappling with a dramatic slump in property values, leaving investors and homeowners questioning the future of this once-thriving residential hotspot.

After years of steady growth, with property prices climbing 40.5% between 2013 and 2022, the City, located in London’s financial district, has seen a sharp reversal, the Wall Street Journal reported.

Sale prices in the area have tumbled by more than 10% in 2024 alone, far outpacing the modest 2.5% decline seen across inner London during the same period.

The City “has really died a death,” Tom Kain, a buying agent with Black Brick told the Journal. “That whole environment where people worked in the City for really long hours and wanted an apartment there is just not what people do anymore.”

For nearly two decades, the City was a beacon for property investors.

The completion of The Heron, a landmark luxury residential development in 2013, transformed the area from a purely commercial hub into a desirable residential enclave.

Developers rushed to cash in, launching high-end projects like One Bishopsgate Plaza, and adding a new wave of trendy restaurants and bars to attract well-heeled professionals.

But the rise of remote work, shifting buyer preferences, and rising interest rates have cooled demand.

“People are more open to commuting if they only have to be in the office a couple of days a week,” Nick Verdi, a director at Savills told the Journal.

“And at the same time, there is definitely more supply. A lot of stock has been built in the past 10 years.”

The result is a buyer’s market where homes that once sparked bidding wars now struggle to attract attention.

“When I started, you could literally put a property on the market on a Friday, book in 10 viewings over the weekend, and have a sale agreed on the Monday,” Karl Graham, head of sales at John D Wood & Co. told the outlet. “Now it is the other way around. You have five properties for every buyer.”

Peter Brewer, a semi-retired hedge fund manager, is one of the many homeowners caught in the City’s property slump.

In November, he listed his six-bedroom penthouse apartment for $5.02 million, hoping to turn a profit after a decade of ownership.

“Given the amount we paid for the flat and have invested in its renovation, I would have expected to put it on for £5 million ($6.25 million), not £4 million ($5.02 million),” Brewer said. “You’d be hoping for a pretty significant uplift after 10 years, but that is not the case.”

Despite the City’s luxurious appeal, the neighborhood’s rising prices have eroded its competitive edge.

“As prices have gone up, it has caught up with some of the more traditional, desirable residential areas,” said Kain. “People would prefer to live in Mayfair or Marylebone. When it represented value for money, it made more sense.”

The City’s challenges extend beyond falling prices. The shift toward hybrid work has significantly reduced the number of daily commuters, with weekday trips to the City dropping 21% between 2023 and 2024, according to the Virgin Media O2 Movers Index.

Even institutional demand has waned.

While some companies, like Goldman Sachs, have pushed for a return to the office, others, including the Bank of England and Lloyd’s of London, allow flexible schedules that keep workers home for much of the week.

The 5,000 employees at the Bank of England, for instance, only need to spend 40% of each month working in the office.

Coupled with tax changes that have made property investment less attractive, the City is struggling to maintain its momentum as a residential hub.

While some buyers, like 29-year-old Jocelyn Ho, still see value in the City’s central location and convenience, many others are looking elsewhere.

“I really like the area,” Ho told the outlet of her recent purchase at The Haydon, a new luxury development. “It is really accessible, it is safe for a single female, and the transportation is amazing. I do a lot of activities after work so I want to live in a central area.”

Yet for sellers like Brewer, the City’s falling fortunes underscore a broader reckoning for London’s property market.

As prices slide and competition rises, the days of easy profits appear to be over.

“It is now a buyer’s market,” said Graham. “Property will only sell if it is sensibly priced”