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Property prices fall in upmarket London boroughs

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Residential property prices in some of London’s most prestigious boroughs shrank sharply during the pandemic, in stark contrast with strong growth across the rest of the country, official data showed.

In the year to March 2021, the median price in Westminster, the City of London and Kensington and Chelsea fell by an annual rate varying from 2.3 per cent to 14 per cent, according to data published by the Office for National Statistics.

Prices dropped among only a dozen of the 332 local authorities and this contrasts with prices across England and Wales rising by 11 per cent over the same period. More than 80 local authorities, mostly outside London, registered double-digit growth.

Brentwood in Essex, the Isle of Wight, and South Hams in Devon all registered growth rates above 15 per cent.

The pandemic has resulted in strong house price growth in much of the UK, as in most other advanced economies, as buyers took advantage of low interest rates and accumulated savings.

However, central London has largely bucked the trend as many people decided to move to less crowded areas following increased homeworking during the restrictions. Less immigration and fewer international buyers also kept a lid on prices.

“On the property front line we’ve seen a fundamental change in what buyers want,” said Jonathan Hopper, chief executive of buying agency Garrington Property Finders. “More space, a garden, and a less urban location consistently top the wishlists of those planning a move,” he added.

The Land Registry publishes monthly house price data up to August, but its figures are based on mean prices, which could be affected by the strength of the high-end market.

In contrast, the ONS reveals that in England and Wales the median price — the middle point for transactions — for detached, semi-detached and terraced houses rose by an annual rate of about 11 per cent in the year to March 2021, with expansion in all regions and in most local authorities.

The median price of flats increased by less than half that over the same period. In some regions and in nearly half of local authorities, median flat prices registered outright contractions, including double-digit falls in the City of London and Westminster.

This official analysis of the housing market captured “the moment the starting gun was fired on the ‘race for space’ — and when flat owners became collateral damage of the pandemic”, said Hopper.

Line chart of Median price of residential properties £'000 showing Prices in Kensington and Chelsea are down

As a result, the median price paid for residential properties in Kensington and Chelsea dropped to £1.27m in the year ending March 2021, down from £1.3m at the same time last year and the lowest since the same period in 2017. In the City of London, median house prices fell to a seven-year low of £768,000.

This is despite prices for the most expensive detached houses in Kensington and Chelsea increasing to a median of £11.5m, the highest on record strongly up from £8.4m before the pandemic.

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