City of London house prices dropped in August

House prices dropped by 1.3% in City of London in August, new figures show.

The drop contributes to the longer-term trend, which has seen property prices in the area suffer an 11.6% annual decline – the worst in the UK.

The average City of London house price in August was £810,106, Land Registry figures show – a 1.3% decrease on July.

Over the month, the picture was different to that across London, where prices increased 0.9%, and City of London was lower than the 0.9% rise for the UK as a whole.

Over the last year, the average sale price of property in City of London fell by £106,000 – putting the area bottom of the UK’s local authorities for annual growth.

The highest annual growth in the region was in Harrow, where property prices increased on average by 15.9%, to £556,000.

An imbalance between supply and demand for properties saw house prices climb across the UK throughout the pandemic.

But experts say expectations have changed significantly in recent weeks amid mortgage rate rises, with the likelihood of a dampening effect on house price growth.

According to figures from Moneyfacts.co.uk On Wednesday, the average two-year fixed-rate mortgage on the market has a rate of 6.52% and the average five-year fix is at 6.36%.

There are around 900 fewer mortgage products available than there were on the day of the mini-budget in September.

Chris Druce, senior research analyst at Knight Frank, said: “Current activity in the housing market is being shaped by mortgage status.

“Those that can are pushing on and securing deals ahead of further increases, while others have paused plans to digest events.

“With affordability set to be a growing barrier for many homebuyers in the coming months, we forecast house price growth will slow from here, with price falls in 2023.”

First steps on the property ladder

First-time buyers in City of London spent an average of £831,000 on their property – £108,000 less than a year ago, and £38,000 less than in August 2017.

By comparison, former owner-occupiers paid £798,000 on average in August – 3.9% more than first-time buyers.

How do property prices in City of London compare?

Buyers paid 46.6% more than the average price in London (£553,000) in August for a property in City of London. Across London, property prices are high compared to those across the UK, where the average cost £296,000.

The most expensive properties in London were in Kensington and Chelsea – £1.3 million on average, and 1.6 times as much as more than in City of London. Kensington and Chelsea properties cost 3.8 times as much as homes in Barking and Dagenham (£354,000 average), at the other end of the scale.

The highest property prices across the UK were in Kensington and Chelsea.

Factfile

Average property price in August

City of London: £810,106London:£552,755UK: £295,903

Annual change to August

City of London: -11.6%London: +8.3%UK: +13.6%

Highest and lowest annual growth in London

Harrow: +15.9%City of London: -11.6%