House prices in this London borough are 38 times annual earnings

 
Helen Cahill
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House prices started faltering in Chelsea last year (Source: Getty)

Dream of affording your own home in London?

Well, don't start your house search in Kensington and Chelsea.

Read more: A third of first-time buyers now spend half a decade saving for a home

The latest figures from the Office for National Statistics show that house prices in Kensington and Chelsea were 38.5 times median annual earnings in 2016. In 1997, house prices in London's most well-heeled neighbourhood were 11.8 times earnings.

This graph shows how the affordability ratios have changed in the local authorities with the smallest, and the largest shifts in affordability, since 1999:

However, in an extraordinary reversal of fortunes for the homeowners of west London, house prices started falling in Kensington and Chelsea last year, and are now down by as much as 13 per cent. Some analysts are expecting prices to fall by the same amount again this year.

The house price falls in Chelsea have been in part driven by government policy on stamp duty. Former chancellor George Osborne raised the rates of stamp duty on homes worth more than £1bn, a tax increase that is being fought by many in the property industry.

Dropping Chelsea house prices are hardly a barometer for what is happening across the country, however. Median house prices in England and Wales have sky-rocketed by more than 250 per cent over the past nine years, and earnings growth has been limp in comparison, up by 68 per cent over the same period.

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