London house prices fall as Brexit fears hit the capital harder than any other UK region

The uncertainty surrounding the EU referendum could already be impacting on London's property market. New figures show two of the capital's prime boroughs recording the most dramatic price drops.

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House prices in London have fallen as uncertainty caused by the EU referendum takes a greater toll in the capital than anywhere else in the UK, new figures show.

The average price of a London home dropped by £971 (0.2 per cent) to £643,117 in the past month. Prices in the borough of Richmond have plunged dramatically - by more than 10 per cent - according to Rightmove’s monthly house price index.

Miles Shipside, Rightmove’s director and housing market analyst, said: “Markets typically dislike uncertainty, and London’s fall in prices seems to be in line with what one would expect, though for some reason it is out of kilter with the rest of the country.”

Nationwide house prices rose on average by £2,320 (+0.8 per cent), meaning the capital lags behind the rest of the UK by a full percentage point. The rise takes the national average price of property coming to market to a new high of £310,471. 

Rightmove said the contraction could be caused by fears Britain may vote to leave the European Union weighing heavy on the minds of buyers and investors.

The country goes to the polls on Thursday, with recent polls putting the two sides virtually neck and neck.

April's stamp duty hikes continue to impact the buy-to-let and prime property sectors of the London market. Affluent areas in the capital appear to have seen the greatest falls in prices, with Richmond seeing a drop of 10.2 per cent while values in Kensington and Chelsea fell 9.4 per cent.

By contrast, Southwark, Lambeth and Hackney all posted growth in excess of five per cent. But the overall picture for the city was negative.

Mr Shipside said: “We’ve become accustomed to prices rising in London and now that the pace of rises has slackened it’s easy to forget that the price of property coming to market is still £228,632 higher than it was six years ago. 

“Buyers either have physical limits to what they can afford or mental limits to what they are prepared to pay, and this month Londoners are at odds with the rest of the country.”

The value of an average UK home coming to market grew to a record high of £310,471, according to the data.

Rightmove said it indicated recent political developments were failing to have the same downward pressure on prices as were seen ahead of the 2015 general election when uncertainty produced a 0.1 per cent during the month of the poll.

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