Some London boroughs see £230,000 wiped off the average house price

Just six London boroughs managed to register an increase in house prices in 2023, while the rest faced a drop, especially in the prime market, research reveals.

A new report by Benham and Reeves, based on the latest data from the Land Registry, shows how the capital’s housing market fared over the last year, amid higher mortgage rates and lower buyer demand.

The average house price in London fell by -5.2% from January to December 2023, ending the year at £508,037 – the biggest fall of any UK region.

This contrasts with the record highs achieved during the pandemic market boom, when London property prices soared.

‘London market that has naturally been hit the hardest’

Marc von Grundherr, a director of Benham and Reeves, said: “With house prices cooling during the later stages of last year, it’s the London market that has naturally been hit the hardest given the far higher cost of homeownership, with all but a handful of boroughs experiencing a decline.

“Largely speaking, this decline has been marginal in the grand scheme of things and the vast majority of boroughs have only seen slight corrections, with house prices remaining there or thereabouts when compared to the record peaks seen during the pandemic market boom.”

He added: “However, the damage done across the prime market, in particular, has been far more pronounced, although the silver lining is, of course, that there’s never been a better time to buy at the very high-end of the London housing market.

“But rest assured that when the London market does turn, it turns quickly and with interest rates now falling, it’s only a matter of time before the sleeping giant of the UK property market awakens. When it does, we expect London property prices to not only rebound, but to once again lead the rest of the UK with respect to the rate of growth seen.”

The most severe drops in house prices

The report reveals that the most severe drops in house prices occurred in London’s most expensive prime boroughs, such as the City of Westminster, where the average house price plunged by -20.9% (-£232,015).

Other prime boroughs that saw significant falls include Kensington and Chelsea (-17.4%, -£236,346), the City of London (-16.6%, -£160,221) and Hammersmith and Fulham (-13.2%, -£101,522).

Out of the 33 London boroughs, 27 recorded a fall in house prices, and six boroughs defied the downward trend and achieved positive growth.

The best performer was Richmond, which saw a 2% increase, followed by Camden with 1.6% and Newham with 1.1%.

Hackney, Lewisham and Islington also saw marginal gains of 0.7% and 0.8% respectively.

The report suggests that these six boroughs offer more affordable and attractive options for buyers looking to invest in the London property market, while the prime market remains subdued.

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