Property prices still falling in third of capital

Sri Carmichael, Consumer Affairs Reporter
24.08.09

House prices are still plunging in one in three London boroughs, a new analysis of the property crash shows today.

Experts said the market is still falling in many areas including Hillingdon and Lewisham.

Overall, property in the capital is rising in value again - but that recovery is being driven by a handful of areas.

The "gold ghetto" of Kensington and Chelsea has seen the most dramatic recovery - 22.5 per cent of the 29.9 per cent drop from peak values in October 2007.

But in Enfield prices fell 14.3 per cent from their peak and have recovered by just 0.8 per cent. Of the 19 boroughs registering rises, nine have recovered by less than five per cent.

Seema Shah, property economist at Capital Economics, said: "Evidence of a widespread, sustainable recovery in London house prices is very patchy. Contrary to popular perception, the upturn is far from universal.

"Where prices have shown signs of recovery, it has generally been relatively weak given the scale of the falls seen during 2008 and 2009. In Brent, for example, the eight per cent rise since January has only returned house prices to their October 2008 level."

Ms Shah said that while prices in Kensington and Chelsea and Westminster have risen strongly, those in Camden, Richmond and Hammersmith and Fulham, the next three most expensive boroughs, are still falling.

Ms Shah warned that rises have been partly driven by a lack of houses for sale and if more homes flood the market in the autumn, prices could crash again.

Property economist Ed Stansfield said: "With the extreme uncertainty of late 2008 and early 2009 in the past, we expect sales instructions to rise. If some of last year's accidental landlords now decide to sell up, new instructions could very plausibly outstrip demand. After the housing crash of the early Nineties, prices edged up between 1993 and 1996 then fell back again. The wider economy is in worse shape now than then."

Mr Stansfield said house prices could therefore fall by up to another 20 per cent.

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