Britain’s most expensive property market – Kensington and Chelsea – is set to be the most immune to a price crash in 2023, said Garrington Property Finders.

The independent buying agents said that just one in eight residents of the posh London borough has a mortgage on their home.

This means most will be unaffected by the spike in interest rates which the Financial Conduct Authority predicts could push 770,000 households into mortgage arrears over the next two years.

Over a quarter (27.6%) of households in Kensington and Chelsea own their home outright, and levels of outstanding mortgage debt in the wealthy borough are exceptionally low, at just 7.3% of the total value of homes there. Property in the borough is the UK’s most expensive, with a median price of £1.4m in the year to June 2022, according to the Land Registry.

Garrington’s analysis of nearly 100 locations identified the strongholds offering maximum price stability, and the weak spots set to offer the biggest discounts to buyers in 2023.

Most vulnerable to price falls

At the other end of the scale, almost a third (32.1%) of households in the Surrey town of Crawley have a mortgage on their home and the total debt-to-equity ratio is three times higher than Kensington’s at 21.4%.

First-time buyers – who typically have few savings to fall back on and are more exposed to interest rate rises as mortgage payments swallow up a big chunk of their earnings – account for 7.1% of households in Crawley. By contrast, they make up just 0.1% of Kensington & Chelsea residents.

The most vulnerable areas tend to be more affordable places popular with first-time buyers, where homeowners have much higher levels of mortgage debt as a percentage of the value of their homes. First-time buyers account for one in 10 homeowners in Dartford in Kent, and 8% in 95th placed Milton Keynes.

Many of these markets also saw very rapid price rises following the pandemic – average prices in Milton Keynes jumped by 17.4% in the year to the end of November 2022 – which may now increase the likelihood of a correction.

The top 10 strongholds most resistant to price falls

1. Kensington and Chelsea
2. Westminster
3. Camden
4. Swansea
5. Oxford
6. York
7. Cambridge
8. Hammersmith and Fulham
9. Bournemouth
10. Exeter

Jonathan Hopper, CEO of Garrington Property Finders, said: “Prime London postcodes, as well as several popular university cities, are the most likely to escape relatively unscathed.

Homeowners in these markets often have a good chunk of equity under their belts and are therefore more insulated from rising mortgage costs. Unlike much of the country, the three London boroughs in our ‘most resilient’ top 10 also saw prices fall last year, making them less prone to further correction now and thus an attractive proposition to buyers looking for stability.

“By contrast, our research suggests that towns which saw very rapid post-pandemic price rises and lots of first-time buyers, such as Crawley and Milton Keynes, could be set for sharper price falls in 2023. For tactical buyers looking to secure a big discount, these more exposed areas could throw up some strong buying opportunities this year.”

The top 10 weak spots most likely to see prices fall

1. Crawley
2. Milton Keynes
3. Barking and Dagenham
4. Slough
5. Aldershot
6. Swindon
7. Croydon
8. Dartford
9. Watford
10. Luton