House prices in wealthy London boroughs fall by up to £300,000

House prices in London's most affluent neighborhoods tumbled by up to £300,000 last year, according to the latest figures from the Office for National Statistics (ONS). The average property cost across the capital dropped by 2.5%, reaching £554,000 in the year to June. However, the decline was far more pronounced in certain upscale areas.

Westminster, home to luxury postcode districts such as Mayfair, Belgravia, and St John's Wood, saw a staggering 25.4% decline in average house prices, dropping to £854,000. Kensington and Chelsea experienced a 14.7% decline, bringing the average price to £1.25 million. Hammersmith and Fulham and Camden also faced significant reductions, with prices falling by 13.3% and 7.1%, respectively, to £726,000 and £833,000.

This series of sharp drops marks the tenth consecutive month of declining values in London's housing market. Property experts attribute the market's vulnerability to higher mortgage rates resulting from the Iran war and the capital's disproportionately high stamp duty. Economist Paige Tao of PwC noted that London's underperformance extends beyond the mortgage rate issue, citing high starting valuations, transaction costs, and sensitivity to global demand as contributing factors.

Property portal chief Jonathan Hopper believes that London's housing market may have "finally bottomed out," with prices potentially reaching a turning point as more buyers return to the market. Despite this, Knight Frank analysts predict that rising inflation and pre-budget speculation over potential tax hikes will keep prices relatively stagnant until the end of the year.