House prices rise in May but not in London where properties in one borough have nosedived by 28%

Property prices in central London are falling dramatically, according to the latest figures from the Office for National Statistics.

Some central boroughs have witnessed up to a 28 per cent collapse in values in the year to the end of May.

It is in contrast to the rest of Britain, where average property values climbed 2.7 per cent year-on-year to £271,000.

In London, the typical home has fallen in value by £20,693 or 3.7 per cent to £544,814. 

But in central boroughs where the most expensive homes are located, prices are falling much further. 

In the City of Westminster, the average property has fallen from £1.14million in June last year to £836,000 as of May.

That means £304,000 has been shaved off the average home in a borough that includes Hyde Park Marylebone, Pimlico and Paddington. In percentage terms it represents a 26.6 per cent fall.

In the City of London, which includes Bank, Fleet Street, Barbican and Liverpool Street, average prices have fallen 28 per cent from £872,000 in May last year to £627,000 in May this year.

Kensington and Chelsea has seen average prices fall from £1.406million to £1.256million. It is a price drop of £150,000 and an average 10.7 per cent annual fall.

Camden, the City of London, Hammersmith and Fulham, Tower Hamlets, Islington and Wandsworth have all seen prices fall by around 6 per cent or more.

Buying agent Jonathan Hopper of Garrington Property Finders says London is a buyers' market and big discounts are being negotiated. 

He said: 'The number of sellers far exceeds the number of serious buyers, and this has created a buyer’s market in which buyers can dictate both prices and transaction levels,' he says.

Borrowing costs are also playing a role too. Mortgage rates are back on the rise with the lowest fixed rates heading back towards 4.5 per cent or higher.

Hopper added: 'Buyers in London and the south east typically need larger mortgages, and the spike in interest rates following the outbreak of conflict in the Middle East has limited the amount they can afford to borrow - forcing many to drive a very hard bargain on price. 

'Under pressure sellers often have little choice but to accept low offers, and this price cutting is feeding through into the data.'

Prices rise in northern England 

Further north, it is a different story and prices are rising more aggressively. In the North East the average home has risen 5.9 per cent to £163,933 and in the North West values are up 5.8 per cent to £219,506. 

Scotland, Wales and Yorkshire and The Humber have all seen average prices climb by more than 4 per cent, while Northern Ireland continues its house price boom, up 7.4 per cent year-on-year.  

In the south west and south east of England, average property values are up 1.7 per cent and 1.2 per cent respectively year-on-year. 

Jason Tebb, president of property website OnTheMarket said: 'Property prices contracted in London by 3.7 per cent over the year, due to increased stock available and buyers finding it harder to raise the necessary finance to afford properties which are considerably higher than in other parts of the country.' 

The data also shows a widening gap between the prices of houses and flats.

The average flat has fallen 1.3 per cent in value over the past year, according to Land Registry figures.

Meanwhile semi-detached houses are up 4.5 per cent and terraced houses are up 3.6 per cent.