Central London house prices fizzle, demand moves into home counties

Data from estate agent Knight Frank found that prime central London property increased by just 0.8% in the year to March, the lowest figure since October 2009, as house prices falling in several well-heeled areas.

In Knightsbridge the average residential property declined 6.8% over the past year to around £3m, with house prices in South Kensington dropped 4.9% and in Chelsea by 2.5%.

Tom Bill, head of London residential research at Knight Frank, said: "There is a growing recognition on the part of vendors that the prime central London property market is no longer on the upwards trajectory it was in the years following the financial crisis."

He said he thought that, under the surface, "the market is quietly self-correcting”.

Not all London homeowners were crying into the flat whites, however, with both Islington and the City seeing 8% growth in house prices, while along the South Bank prices were up 3%.

Meanwhile, with the average price in London now more than £500,000 - more than double the national average - more Londoners are ditching the capital in favour of cheaper, bigger properties in commuter belt towns.

According to research by another estate agent, Savills, 30% of home buyers moving in properties in the commuter belt in the first three months of this year were moving from the capital itself.

This compares to a proportion of 23% in the first quarter of 2015.

Savills' Sophie Chick said the trend was "likely to continue", as central London's soaring prices are expected to level off with the wider south-east now widely expected to set the pace in the coming years.

"We’ve been talking for so long about buyers moving out of London, but now we’ve reached a turning point. When prices were going up at such a rate in London, it was easy for people to say, 'We’ll sit tight before we move out,'" Chick said.