The combined value of homes across London has surged to £2.64 trillion, according to new analysis by Zoopla, reaffirming the capital’s dominance in Britain’s property market even as price growth continues to lag behind the rest of the country.

The research estimates that London’s 3.8 million homes now account for almost a quarter (24%) of the UK’s total residential property value of £10.8 trillion.

Despite economic headwinds and years of weaker demand, the capital’s housing stock remains worth more than the entire market capitalisation of the FTSE 100, currently around £2.5 trillion.

However, house price growth in London has slowed markedly. Over the past decade, inner London home values have risen by just 10% – less than 1% a year – compared with a 41% increase nationally.

HIGH HOUSE PRICES

Zoopla attributes this underperformance to high house prices and tighter affordability, which have constrained demand since the Brexit referendum and the pandemic.

The City of Westminster remains London’s most valuable borough, with residential property worth £175.1 billion, followed by Kensington and Chelsea, Wandsworth, Camden and Barnet.

Together, these five boroughs account for more than £700 billion – or one-fifth of the capital’s total housing wealth.

But it is outer London that now underpins much of the city’s value. Boroughs such as Barnet (£117.6bn), Ealing (£92bn) and Bromley (£90bn) are driving overall worth through the sheer volume of family homes, rather than soaring prices.

The five most affordable boroughs – Barking and Dagenham, Croydon, Lewisham, Newham and Bexley – represent 11% of London’s total housing value thanks to their density.

AFFORDABILITY RESET

Richard Donnell, Executive Director at Zoopla, said: “London’s housing market remains the most valuable market in the UK, but higher home values have created affordability problems that have held back house price inflation over the last decade compared to the UK as a whole.

“Earnings are rising faster than house prices which is helping to reset affordability and opening up more opportunities for homeowners to move home while broadly static home prices in inner London are presenting increasing opportunities for savvy home buyers.”

Zoopla said the figures highlight how London’s market, though cooling, remains a pillar of the UK economy – with its housing value comparable to that of the world’s largest corporations.