Britain's housing market is booming – everywhere, that is, except London, where despairing homeowners have watched the value of their property plunge over the last year.

The average house cost rose by 2.7 per cent in May, the Office for National Statistics said. 

The annual increase means the typical property increased in value by £7,217, taking the price to £271,000.

It comes after the average UK house price increased 'sharply' in April, with a 3.8 per cent annual rise. 

Average house prices increased 2.3 per cent to £292,095 in England, 4.4 per cent to £195,543 in Scotland and 4.2 per cent to around £215,212 in Wales. 

The average house price for Northern Ireland was £198,015, marking a 7.5 per cent annual increase.

Homeowners in the North East and North West of England saw the biggest price rise. In the North East properties increased 5.9 per cent to £163,933 and in the North West they rose 5.8 per cent to £219,506.

However London properties saw a dip in value, as homes dropped 3.7 per cent – or by £20,000 – to £544,814. Only 12 out of the capital's 32 boroughs saw prices rise. 

Some of the strongest growth was in areas just outside London.

In Epping Forest, at the end of the Central Line, the average home rose £29,086 to £535,682.

In Welwyn Hatfield, Hertfordshire, prices rose £26,617 to £453,552, and in Surrey Heath they rose £25,774 to £457,454. 

London was the exception. 

Westminster properties were hit the hardest, with an annual loss of £247,188 in value in May, dropping the price to £836,331.

Prices in The City plunged to near equal levels, with a drop of £244,895 over the year, making the average property price £636,980.

Properties in the London borough of Kensington and Chelsea also took a hit in this month's House Price Index, with house prices falling by £150,161 to £1.2million. 

Waltham Forest was the best-performing borough, up £15,552 to £524,337, followed by Haringey (up £14,802 to £633,853), Havering (up £12,414 to £452,798) and Redbridge (up £11,837 to £495,947). PICS

East Dunbartonshire was the best-performing area in Scotland, with the value of properties increasing by £25,428, taking the average price to £274,687.

Meanwhile The Orkneys saw the greatest drop, losing £5,892 to make homes worth £214,237. 

This came after properties on the remote Scottish islands gained £58,635 over the year in April, making the average home now worth £264,851.

Homeowners in Caerphilly experienced the greatest rise in Wales, increasing by £16,790 to £198,809.

Yet Monmouthshire was the hardest hit area, with properties dropping by £5,514 to £325,582. 

These figures follow April experiencing the highest annual inflation rate – at 3.9 per cent – since March 2025, just before stamp duty changes were put in place on April 1 that year. 

Average UK prices increased by 0.3 per cent between April and May, compared to an increase of 1.5 per cent in the same period a year ago.

While mortgage approvals dropped in May, according to the Bank of England, bringing the number below the average over the previous six months. 

Tom Evans, Sales Director at Purplebricks Estate Agency, said: 'Fantastic news for homeowners with house prices returning to growth, indicating confidence is creeping back.

'With borrowing costs beginning to ease and lenders continuing to offer more competitive fixed-rate mortgage deals, first-time buyers have greater opportunity to get a foot on the ladder.

'And, a rise in prices will likely spur those higher up the chain who may have been put off moving because they felt they would not get what they felt their house is worth from a sale.

'While affordability remains a challenge for some, the market has shown real resilience, and the picture for homeowners is becoming more and more encouraging.'