House prices in prime London postcodes — the most expensive, such as in Kensington & Chelsea — are falling, though they continue to soar in other areas of the city. Estate agent Stirling Ackroyd said in its London New Homes Monitor report that the top quarter of the market saw prices fall by 2.4% on average over the year to the final quarter of 2015. The rest of the London market saw 8.4% price growth.
"Luxury no longer means profit – or at least you can no longer presume so," said Andrew Bridges, managing director of Stirling Ackroyd. "London's hugely diverse property market is undergoing a serious readjustment, with the traditional old heart of 'prime' London under pressure from many fronts – from a low global oil price and China's economic slowdown to stamp duty reform and international fears of Brexit."
|Postal District (Top fallers)||District code||Average property values||QoQ change (Q3-Q4 2015)||Annualised QoQ change|
|Kensington High Street||W8||£1,779,438||-3.1%||-11.8%|
|Hampstead & Swiss Cottage||NW3||£1,051,454||-2.4%||-9.2%|
|East Sheen & Mortlake||SW14||£940,091||-2.3%||-8.8%|
|Moorgate, City of London||EC2V||£653,653||-2.1%||-8.2%|
|Barnes & Castelnau||SW13||£972,126||-1.8%||-7.1%|
|Merton & Wimbledon||SW19||£690,210||-1.4%||-5.4%|
But elsewhere in the market, which is less reliant on demand from foreign investors, there is a persistent supply shortage. Around 24,000 new homes were started by builders in London in 2015, according to figures from City Hall, but 50,000 are required annually to keep up with demand. As prices top out in prime central areas, both investors and homebuyers are forced further out to find value, driving up property demand and values in outer areas.
"Anyone who thinks that London property is synonymous with international jetsetters is only looking at a very small part of what London has to offer," Bridges said. "New, dynamic parts of London are emerging further east, driven by a less traditionally exclusive but highly aspirational clientele."
Figures from Land Registry show the average house price in England and Wales hit £189,901 in March 2016 after rising by 6.7% over the year. In London, however, prices are rising much faster. The city's average increased by 13.9% annually to £534,785.