Average London home price falls below half-million pound mark

Average fixed-mortgage costs have eased slightly in recent months (Victoria Jones/PA) (PA Wire)

The average price of a home in London has fallen below the half a million pound mark for the first time since July 2021, official figures revealed today.

Data from the Land Registry shows UK house prices in March rose year-on-year for the first time since last summer, but property values in the capital continued to fall. London and the South East were the only regions where prices declined.

The average price of a house in London in March was £499,663, which is about £17,500 less than in March 2023.

Prices have now fallen by about 8% in 18 months since their peak in August 2022, before Liz Truss and Kwasi Kwarteng’s mini-Budget led to chaos in the mortgage markets, which hit property values. If the impact of high inflation during that time is included, the real value of London homes has fallen even faster, by about 16%.

The most expensive properties saw the sharpest declines in value.

The price of a detached house in the capital was also only barely above the £1 million mark, at £1.004 million, falling by about 7%.

Inner London house prices were falling fastest, by 7.3%. In each of Westminster, Camden and the City, prices were down by more than 20% year-on-year.

In contrast, the price of an outer London flat was down only 1%.

Meanwhile, rents in the capital are still rising by more than 10% year-on-year, but no longer at record highs. The cost of an average rental property rose again to £2,070, but at a slower pace. Kensington and Chelsea continued to see the highest rents in the country.

Craig Fish, director at Docklands-based Lodestone Mortgages & Protection, told industry news service Newspage: “We are still witnessing many incidents of down valuations where asking prices are totally unrealistic. We are seeing lots of enquiries from those wishing to purchase but until there is more confidence around future mortgage pricing, these enquiries are unlikely to convert into written business. The buy-to-let market is virtually non-existent at present, and whilst we are not witnessing a mass exodus, we are also not seeing much new investment.”