House prices in central London have plunged by an average of 23% in a year, according to official figures from the Office for National Statistics. The sharpest fall was in Westminster, where the average house price dropped to £836,331 in May, down from £1,083,519 a year earlier – a decrease of £247,000 or 22.8%.
Boroughs with Biggest Drops
The second biggest percentage fall was in Tower Hamlets, down 14.5% or £76,000 over 12 months. In Kensington and Chelsea, the average house price fell by 10.7% or £150,000, though it still stands at £1,256,000. Hammersmith and Fulham saw a 10.9% drop, or £89,000. Camden, Islington and Wandsworth have all seen drops of over 6%, with falls of £53,000, £46,000 and £42,000 respectively.
Some Boroughs See Rises
Some boroughs are still seeing modest rises. The biggest percentage increase was in Waltham Forest, up 3.1% or £15,000. Rises of more than 2% were recorded in Bexley (£9,000), Haringey (£15,000), Havering (£13,000), Lewisham (£11,000) and Redbridge (£12,000).
Impact on Homeowners and Buyers
People trying to get onto the property ladder or move to a bigger home may welcome the price drops as they could need a smaller mortgage. But for existing homeowners, a fall in their main asset's value could be a blow, potentially threatening negative equity. House prices have been falling in London for nine months in a row, according to the ONS.
Possible Factors
The falls for high-value properties in central London may be partly due to the new “mansion tax” on homes worth £2 million and over, set to come into force in 2028. The capital’s property market could be further hit if Prime Minister Andy Burnham presses ahead with a new homes levy to replace council tax and stamp duty, which he has previously backed. The shake-up, based on property values, could land London with an extra £7.5 billion property tax bill.
