London Property Prices
One London Borough Is Continuing to Boom as Housing Market Slows

Richmond upon Thames is the only remaining London borough where prices have risen by double digits in the past year.

The leafy suburb, stretching from Kew Gardens in the north to Richmond Park in the south, is defying a wider slowdown. Demand for open space helped send home prices there up 11% in the 12 months through May, according to an analysis of UK Land Registry data by Bloomberg News.

The figures, which are smoothed to remove outlier transactions, show the median price paid for an existing home in the borough reached a new high of about £809,000 in May.

The cooling of the capital’s property market is radiating out from its central boroughs, with values in those areas unchanged or showing negative annual growth. Higher mortgage rates, spiraling inflation and crippling energy price increases are combining to put the brakes on the market.

Southwest London, stretching from South Kensington to Wimbledon, is seeing lower buyer interest compared with the last five years, according to property portal Zoopla. That comes after surging values during the pandemic made the area unaffordable for many. The City of London and its fringes are also drawing significantly less interest from purchasers, the data show.

Annual house price growth will stop in the UK if and when mortgage rates hit 4% and will probably fall modestly if they go above that level, Zoopla said earlier this week. The average five-year fixed-rate home loan rose past that level this month, according to Moneyfacts Group Plc.

The average price of an existing home in London reached about £514,000 ($622,500) in May, the Land Registry data show, meaning they’re little changed since last summer.

Growth has instead been concentrated in the new homes market where values soared to a new high of almost £628,000 in May, leaving developers the big winners from the pandemic housing boom.

What Bloomberg Intelligence Says...

“Lack of supply remains a critical support for the housing market, with growth set to slow quickly. Higher house prices bolster UK banks’ loan-to-value cushions, yet the triple threat of rampant inflation, interest rate hikes—with the path set to near 3% by early 2023—and plunging consumer confidence may limit mortgage appetite at higher LTV levels.” – Jonathan Tyce, senior banks analyst