Mon. Dec 6th, 2021

Residential property prices in some of London’s most prestigious districts shrank sharply during the pandemic, in stark contrast to strong growth in the rest of the country, official data showed.

In the year to March 2021, the median price in Westminster, the City of London and Kensington and Chelsea fell at an annual rate ranging from 2.3 per cent to 14 per cent, according to data published by the Office of National Statistics.

Prices have fallen below just a dozen of the 332 local authorities and this contrasts with prices across England and Wales which rose by 11 per cent over the same period. More than 80 local authorities, mostly outside London, have registered double-digit growth.

Brentwood in Essex, the Isle of Wight, and South Hams in Devon all registered growth rates above 15 percent.

The pandemic has led to strong house price growth in much of the UK, as in most other advanced economies, as buyers have benefited from low interest rates and accumulated savings.

Central London, however, largely dampened the trend as many people decided to move to less crowded areas for greater homework during the restrictions. Fewer immigration and fewer international buyers also kept a lid on prices.

“On the real estate front, we’ve seen a fundamental change in what buyers want,” says Jonathan Hopper, CEO of real estate agency Garrington Property Finders. “More space, a garden and a less urban location at the top of the wish lists of those planning a move,” he added.

Line chart of England and Wales, median price, 12 months to March 2018 = 100 showing growth backlog for fixed price

The Land Register publishes monthly house price data until August, but its figures are based on average prices, which may be affected by the strength of the high-end market.

On the other hand, the ONS reveals that in England and Wales the median price – the center of transactions – for detached, semi-detached and terraced houses increased by an annual rate of about 11 percent in the year to March 2021, expanding in all regions and in most local authorities.

The median price of flats rose by less than half over the same period. In some regions and in almost half of local authorities, median flat prices have recorded outright contractions, including double-digit declines in the City of London and Westminster.

This official analysis of the housing market was captured “the moment the shotgun was fired at the ‘race for space’ – and when homeowners became collateral damage from the pandemic”, Hopper said.

Line graph of median price of residential properties £ '000 showing prices in Kensington and Chelsea is down

As a result, the median price paid for residential properties in Kensington and Chelsea dropped to £ 1.27 million in the year ended March 2021, down from £ 1.3 million at the same time last year and the lowest since the same period in 2017. City of London, median house prices have fallen to a seven-year low of £ 768,000.

This is despite the prices for the most expensive detached houses in Kensington and Chelsea rising to a median of £ 11.5m, the highest on record strong from £ 8.4m before the pandemic.

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