House prices in some of prime central London’s most expensive postcodes have plummeted by more than 10 per cent, while further out of town prices have powered ahead, resulting in a new two-speed market in the capital.
The sea-change, caused by factors as diverse as stamp duty reforms and an economic slowdown in China, is creating a new set of winners and losers.
Many of the traditional bedrocks of London’s luxury market are faltering while previously down-at-heel locations have enjoyed an annualised price surge of roughly 20 per cent.
According to research published by estate agents Stirling Ackroyd today, prices in the W8 postcode (around Kensington Hight Street) dropped by an annualised rate of 11.8 per cent in the final quarter of 2015.
In exclusive Notting Hill and salubrious Hampstead, prices fell by 10 per cent and 9.2 per cent respectively when calculated annually.
Prices falls were “confined to the struggling top 25 per cent of London’s property market,” the research said, with an average annual drop of 2.4 per cent.
Average house price in every postcode
However, Soho bucked the downward trend for the top end of the market, recording the fastest rise in prices of any of the 272 postcodes studied.
Houses in Sutton, Tottenham, Enfield and Croydon all performed strongly with prices rising by more than 18 per cent on an annualised rate, as experts said the centre of gravity in London’s housing market was shifting east and away from zone one.
“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 economy slowdown, to stamp duty reform and international fears of Brexit,” said Andrew Bridges, managing director at Stirling Ackroyd.
“Demand has shifted east, while remaining fairly subdued in prime central London,” added Tom Bill of Knight Frank.
Of the 50 areas with the steepest price rises, 39 had average property values under £500,000.
By contrast, nearly nine in 10 of the postcodes where prices had fallen had an average valuation of more than £600,000.
The top end of the London market was cooled by stamp duty changes announced by the chancellor last year which increased the amount of tax payable by anybody buying a home worth more than £927,000. It was also depressed by plans for a new three per cent tax surcharge on anybody buying a second property, which came in this April.
However, prices continue to soar in outer boroughs due to the simple forces of supply-and-demand, according to experts. “There are still too few new homes [to meet] demand from a growing population”, said Bridges.