It appears the house price bubble in prime London real estate has burst, as home values have slumped in many central areas of the capital.
The latest research from Home.co.uk found that 11 out of the 20 areas with biggest price declines in the period between January 2014 and January 2015 are in Central London. Walworth in the Borough of Southwark tops the list with a 15 per cent drop in the average house price, followed by Belgravia with 10.3 per cent and Cromwell Road in Kensington with 8.3 per cent.
The prices of flats in Central London have fallen by 9 per cent on average in the past year, while in the same period the number of flats for sale jumped by 64 per cent.
There is evidence to suggest that the price drops will ripple out and affect areas outside the city centre towards the South East, Home.co.uk says.
“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, “ Doug Shephard, director at Home.co.uk, said.
Prices in Central London have jumped at an extraordinary rate for a very short period (2012 to 2013), followed by a strong jump in the rest of the capital in 2014. Now the market seems to be levelling off.
“In a synthetic property boom and bust such as London has experienced, on account of ultra-low interest rates and other stimulus measures, it is hard to imagine any possible remedial action on the part of the government. Prices this time may simply have to fall back to a more natural equilibrium,” Shephard said.
