House prices in London have risen 0.2 per cent on average in the 12 months to May 2024.
The average house price in the capital is now £523,376 up from £501,880 in April, according to the Office for National Statistics (ONS).
House prices across the UK were up 2.2 per cent year-on-year, with the average house price in the country now at £285,000. London saw the lowest house price inflation of all the regions.
The news comes as the latest ONS consumer price index (CPI) for June stayed at 2 per cent, although the cost-of-living crisis continues.
As a series of micro markets, London’s house price changes vary dramatically at borough level.
London’s Prime Central London market is currently struggling, with millionaires and billionaires currently opting to buy their mansions in Dubai instead. This is reflected in the ONS figures, which show dramatic annual drops in prices for PCL boroughs.
Westminster and Hammersmith and Fullham saw annual price drops of almost 23 per cent. In Westminster, this knocked £273,521 off house prices, bringing the average down to £932,585.
“Our buyers and sellers are not taking as much advantage in the numbers we expected.”
Kensington & Chelsea, while still having the most expensive average property price in the whole country at £1,226,545, has seen house prices fall over 10 per cent — a reduction of £138,214.
Conversely, outer London boroughs have seen prices bounce back well above the national average.
Property prices in Merton, south west London, have risen 4.9 per cent in the 12 months to May, boosting property prices by £27,289 to an average house price of £587,986. Hounslow saw a 3.7 per cent rise in house prices, adding £16,181 to house prices.
Barking and Dagenham is still the least expensive borough to buy in, with house prices down one per cent to an average house price of £337,753.
“It’s further bad news for first-time buyers and second steppers trying to move up the ladder.”
“Our buyers and sellers are not taking as much advantage in the numbers we expected of the slow but steady growth in house prices and wages which may be making property more affordable,” said Jeremy Leaf, a north London estate agent.
"The figures reflect the period in particular before the announcement of the election but that event put the brakes on activity for some as it created considerable uncertainty. Many will hope today’s announcement of inflation holding steady and on target will hasten the albeit small likely drop in base rate next month, which is of more relevance to decision-making."
“With prices continuing to rise month-on-month, it’s further bad news for first-time buyers and second steppers trying to move up the ladder,” said Amy Reynolds, head of sales at Richmond estate agency Antony Roberts. “Combine higher prices with higher borrowing costs and home ownership remains beyond the reach of many.”
“There is a sense that some buyers and sellers are waiting for a rate reduction before taking action.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the news about inflation could mean the Bank of England is edging closer to cutting the base rate. Currently held at 5.25 per cent, high interest rates have pushed mortgage rates and repayments higher, dampening the market.
“While expectations of an August rate reduction may have diminished as core and services inflation are rather higher than the target, it’s time for the Bank to be bold and make that first rate cut,” said Harris.
“There is a sense that some buyers and sellers are waiting for a rate reduction before taking action, so a cut next month could really give the housing market a boost.”
