London house prices: cheapest borough of Barking and Dagenham records highest growth as prime London market continues to cool off

New figures show the capital's cheapest boroughs continue to lead house price growth as buyers widen their search for more affordable homes.

London house prices have increased by 11 per cent in a year, with the most affordable boroughs rising the fastest as the market continues to cool down at the top end.

A report by Rightmove shows the average price of a property coming to market has hit a record high of £644,045, yet overall growth across the capital is a tale of two very different markets.

Annual growth of 23.5 per cent takes average asking prices in Barking and Dagenham, London's cheapest borough, to just below £300,000.

However, in the most expensive borough, Kensington and Chelsea, a price drop of 0.4 per cent over the same period means that average prices remain at an eye-watering £2.35 million.

"Rather than a sign of robust health, it is more one of stagnation and readjustment in many boroughs that are now a shadow of the former price-rise powerhouses of the last few years,” says Miles Shipside, Rightmove director and housing market analyst.

“London is a myriad of different local markets, with some boroughs dramatically up or down, but overall cancelling each other out this month," he said.

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(Listed in order of annual growth)

 

Four of the capital's 10 fastest-growing boroughs have the lowest average house prices: Barking and Dagenham in the east and Bexley, Havering and Newham in the south-east.

As Londoners widen their search for more affordable homes, competition in these outer boroughs remains fierce.

Johnny Morris, head of research at Hamptons International, says: "As stock is thin on the ground, open days have made a comeback across much of outer London. Typically, a home launched on Monday will have an open house viewing on the Saturday and an offer agreed on Monday morning. Even more ambitiously priced homes are only hanging around for a matter of weeks until the market catches up. Sellers are holding out for, and often getting, the full asking price.”

It's a trend that is completely reversed in the prime property market, with growth slowing in many of London's most expensive areas, including Kensington and Chelsea, the City of Westminster, Hammersmith and Fulham and Wandsworth boroughs.

"The last 18 months have seen price growth reduced to single figures across inner London as affordability becomes increasingly stretched and the effect of higher stamp duty rates bites," says Morris. 

"Prices in more affordable pockets have continued to rise fastest, a trend which is set to continue in 2016.”

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