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Buy to Let

Slump in central London property prices

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
10/02/2015

House prices in central London are falling faster than any other area of the country, new research has found.

Analysis of house prices by property portal Home found some areas had seen values fall by as much as 15%.

Walworth, in the borough of Southwark, saw average prices slump 15% between January 2014 and January 2015. A house in the area worth almost £836,000 at the start of last year is now worth just over £710,000.

The upmarket area of Belgravia witnessed a 10.3% drop with Cromwell Road in Kensington falling 8.3%.

The firm said of the 20 UK areas with the biggest year-on-year fall in sales prices, 11 were located in the capital.

Buy-to-let investors could also feel the pinch with yields decreasing and, in some cases, moving into negative territory. This means the value of the property has fallen by more than the annual rent.

There were 15 UK locations recording negative percentage yields in the last year with 12 of these in London. Landlords with a property in Walworth recorded a negative yield of 11.3%, while in Belgravia it was 7.1%.

Across central London the average price of a flat dropped by 9% as the supply increased. During the year the number of flats for sale increased by 64%.

Doug Shephard, director at Home, said the market must wait and see if these price falls started to spread across the country.

“Optimism in the UK housing market is still riding high in the rest of the country, but it comes as a shock to many to learn that prices are crumbling in the most expensive streets in London,” he said.

“We are keen to track these price movements as they may soon have a knock-on effect for the rest of Greater London and, later, the home counties.

“Prices in Central London went up too far, too fast during 2012-13. The same fate then befell the rest of London last year. Now many home buyers and investors are paying the price for their over enthusiasm.”