If you think that property prices only go up and that there is more demand than supply, you should check out the account @LondonPriceDrop on X.
This property.for example in West London
Sold for £350K in 2016, then sold for £247K in October 2025. A 29% price drop in 9 years. Adjust that for inflation and the price has halved.
Or this one- which is down 37% since 2012. It’s not some cryptocurrency or a meme stock. It’s a flat in London.
A combination of high initial values, higher interest rates and taxation are all contributing to the decline. Landlords who are under water are also selling. The falls have been more pronounced in leasehold flats, but freehold properties are also suffering. Higher value super prime areas like Westminster and Chelsea are hit harder but it’s now spreading outwards.
If you are a first time buyer clearly you should welcome these falls. House prices are becoming more affordable especially as earnings have not fallen. the more interesting question sits underneath all of this.
If you’re not really “investing” in property, or a first time buyer and you’re just living in your home… does the price actually matter?
Or to put it more bluntly… is home equity a bit of a fiction? Is it fake wealth?
If your house goes up in value and every other house in your area goes up by the same amount, and you want to stay in that area, you haven’t really become wealthier. You’ve just moved up on paper. The ladder has shifted, but you’re still on the same rung. Similarly if it goes down (and you are not in negative equity)
That’s why, when we think about financial planning, we tend to focus on net investable wealth and largely ignore the value of the main residence. Because that’s the part you can actually use.
Now, that doesn’t mean home equity is worthless. It just means it’s conditional.
You can unlock it, but usually at a cost.
You can downsize, which means giving up some space or location. You can sell and rent, freeing up capital to invest. In some cases, especially where rents haven’t kept up with house prices, that can work surprisingly well. You can also use equity release later in life to fund spending or care.
And plenty of wealthy people choose to rent anyway for flexibility, even if they could afford to buy ten times over.
But if you never do any of those things… if you stay in the same house for life and never borrow against it…
you will never actually realise that wealth.
Your children will.
Of course, this isn’t just about money. Owning your home gives you stability, control, and a sense of permanence that renting doesn’t always offer. Those things matter, and for many people they matter more than squeezing out the last bit of financial efficiency.
But it’s still worth being clear-eyed about it.
A large chunk of what people think of as their “wealth” is tied up in an asset they may never use.
Which leads to a simple but slightly uncomfortable question:
how much of your wealth is real… and how much is just sitting in your walls?