London’s wealthiest boroughs have seen house prices fall by double digits, official figures show.
The City of Westminster, including wealthy areas such as Mayfair and Knightsbridge, saw house values drop 12.7 per cent between February this year and last year, according to the Office for National Statistics.
House prices dropped by 11.2 percent in the neighbouring borough of Kensington & Chelsea, which remains the most expensive place in the country to buy a property with a average cost of £1.2 million.
Across London, average house prices have declined by 3.3 per cent over 12 months up to February, the lowest percentage change in the country, while average house prices in England increased by 0.8 per cent in the same period.
The average house price rose to £290,000 in England, according to a provisional estimate, with Yorkshire and the Humber showing the highest growth where average house prices increased by 3.9 per cent.
Average house prices in Wales increased by 2.5 per cent to £210,000, while Scotland saw 2.3 per cent growth to £187,000.
The price drop in the capital came shortly before the Iran war, which is expected to stunt UK growth further with an impact on mortgage rates and consumer confidence.
Sarah Coles, head of personal finance at AJ Bell, said: “Sellers faced more bad news in February, as house prices fell in London, the South East and the South West, and overall delivered gains of just 1.2 per cent in a year.
“This is a slight uptick from the previous month, but is still a reflection of a seriously sluggish market.”
She continued: “Life is likely to get even tougher for sellers in the coming months, as mortgage rates threaten to keep rising and sentiment cools.
“The war in Iran is taking a toll on the market and raising inflation fears.
“This pushes up interest rate expectations, powering gilt yields which make fixed rate mortgages more expensive.
“It means more buyers could find themselves priced out of the market, so sellers have to cut their prices to make a sale or hang on in the hope that things improve.”
On Wednesday, UK inflation lifted to its highest since December after a sharp jump in diesel and petrol prices caused by the conflict in the Middle East, according to official figures.
The rate of Consumer Prices Index (CPI) inflation increased to 3.3 per cent in March from 3 per cent in February, the ONS said.
Chancellor Rachel Reeves said the Iran crisis was “not our war, but it is pushing up bills for families and businesses” as a result.
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