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House prices in inner London fell at the fastest annual rate since the 2009 global financial crisis in November, highlighting the impact of Budget-related uncertainty and affordability pressures on property in the UK capital.
The 4.6 per cent drop in prices in the heart of the city followed a 4.3 per cent contraction in October and marked the biggest decline since the financial crash, when they fell at double-digit rates as the economy shrank.
Large falls were recorded in the most expensive boroughs, according to data published by the Office for National Statistics on Wednesday.
Average prices in Westminster fell by an annual rate of 15.5 per cent to £866,000, while prices in Kensington and Chelsea plunged 16.3 per cent to an average of £1.19mn.
By contrast, prices in outer London — which includes boroughs such as Barnet, Haringey and Havering — continued to rise, resulting in an overall fall in house prices of 1.2 per cent in the city in the year to November. This compared with a 2.6 per cent decline in the year to October.
Richard Donnell, executive director at property portal Zoopla, said speculation about taxes on expensive homes in the run-up to chancellor Rachel Reeves’ November Budget had “hit demand and market activity at the upper end of the housing market”.
London was the most attractive to dollar-backed overseas buyers for a decade “but concerns over taxation and uncertainty over the outlook for the UK economy are weighing on demand”, he added.
The ONS data on Wednesday showed average UK house prices rose at an annual rate of 2.5 per cent to £271,000 in November, up from 1.9 per cent in October and the first acceleration since June.
Tom Bill, head of UK residential research at real estate group Knight Frank, said affordability was “still shaping the map of UK house price growth, which means more expensive areas like inner London are seeing prices retreat”.
Ian Boreham, ONS head of housing market indices, said the North East was the English region with the highest growth in prices, at 6.8 per cent in the year to November, while “London was the only region showing an annual fall”.