London house prices dropped 6% overall but there have been wild fluctuations between boroughs

London house prices dropped six per cent in the year to November 2023, the steepest annual drop since the 2008 financial crisis, according to the latest house price index from the Office for National Statistics (ONS).

But this does not tell the strikingly varied local story of the capital’s housing market.

At a borough level, house prices fluctuated between annual rises of just over four per cent to lows of minus 28 per cent.

London is less one homogenous market and a series of micro-markets, and each has reacted differently to the economic and political upheavals of the past year.

House prices dropped hardest in the most expensive boroughs: City of London (-27.7 per cent), Kensington and Chelsea (-17.6 per cent) and Westminster (-14.6 per cent).

Transaction numbers faltered and many wealthy owners who needed to sell were forced to slash millions off their asking prices in order to make a sale.

A separate report from Savills found that sales of homes worth £5 million or more fell by 13 per cent in 2023, although they were still well above pre-pandemic levels.
 
Three quarters of the UK’s most expensive homes are bought by cash buyers, and so are less affected by the mortgage chaos that hit the mainstream market.

Savills expects transactions and prices at this level to pick up after this year’s election assuming greater political stability ensues.

Some of the outer boroughs, that had seen rapid house price growth during the pandemic-era race for space also saw large falls.

In Ealing, £51,660 was knocked off the average house price in a 9.7 per cent drop to £482,601.
Croydon has become tipped as one of London’s most affordable boroughs, with an average house price of £395,865 after a drop of 7.9 per cent knocked £33,889 off the value of a home.

House prices in Hammersmith and Fulham were down 6.8 per cent, with homes seeing £51,780 taken off their value in 2023.

With house prices down, mortgage rates becoming more competitive and a buyers’ market in full swing, many first-time buyers are hoping that 2024 could be their year to buy a London home.

Only four boroughs bucked the trend and saw positive inflation in local house prices.

Redbridge and Richmond upon Thames saw house prices increase by 4.2 per cent, adding £20,130 and £31,267 to house values respectively.

Newham saw a more modest increase of 0.8 per cent, while Barking and Dagenham remained almost perfectly stable with an uptick of 0.1 per cent.

With lenders offering a slew of sub four per cent mortgages, Knight Frank has revised it’s forecast with a prediction the London market could see a “mini recovery” in 2024.

But other forecasters are sticking to their projection for another year of falling house prices across the capital.

Blog Post from The Standard

See details of our CHG Guaranteed Rent Scheme here