The £290,000 London house
price slump: High-end homes in capital down as much as 25% – but it’s boom time in the North

Nearly £300,000 has been wiped off house prices in some of London’s most desirable neighbourhoods amid a North-South divide in the property market.

Official figures yesterday showed the average value of a home across the UK rose by 2 per cent in the year to June to £272,000.

But while areas such as the North West and North East saw prices go up by more than 4 per cent, London suffered its tenth month of decline in a row with the value of the average property down 2.5 per cent.

The worst-hit borough in the capital was the City of Westminster – including areas such as Mayfair, Belgravia and Marylebone – where prices fell 25 per cent to £854,198. That fall wiped £290,624 off their value.

In Kensington and Chelsea, prices have fallen by over £215,000 or nearly 15 per cent from approaching £1.5million to around £1.25million over the past 12 months.

Other areas of the capital to see large falls include the City of London, which is down 20 per cent, while the average house price in Tower Hamlets and Hammersmith and Fulham fell 13 per cent. 

The slump follows Labour’s clampdown on non-doms and the threat of further wealth taxes, which has seen an exodus of many affluent people and entrepreneurs.

Stamp duty increases on more expensive homes and a surcharge on second homes have also dented demand alongside the so-called ‘mansion tax’ of up to £7,500 a year on homes worth more than £2million.

The tax hikes have come at a time when even well-off families are struggling to afford expensive homes in pricey areas due to elevated mortgage rates.

PwC economist Paige Tao said the ‘regional picture is becoming more divided’ as prices rise in the North but fall in the capital. 

‘London’s underperformance is more than a mortgage rate story,’ she said. ‘High starting valuations, higher transaction costs and greater sensitivity to international demand mean London must adjust more than most regions.’

Stacy Eden, head of real estate at RSM UK, said: ‘There are significant disparities between regional markets with prices largely rising in the North, and either declining or not moving in the South.

‘This is particularly evident in London, where penal rates of stamp duty and larger mortgages at ever higher mortgage rates are most keenly felt.’

The comments came just a week after the boss of one of Britain’s biggest builders – Bellway chief Jason Honeyman – called for an immediate cut to stamp duty to help revive the housing market.