'Prime' house prices may crash harder than the rest

Whatever London's top-end estate agents might like us to think, their patch is just as vulnerable as everyone else's.

I've written several times about the idiocy of thinking that prime London house prices can somehow avoid the slowdown hitting the rest of the market, most recently in last weeks editor's letter, which subscribers can read here: Even London's property market can crumble. (If you're not already a subscriber, subscribe to MoneyWeek magazine.)

It seems perfectly obvious to me that with bonuses and mortgages thin on the ground, taxes on the up, and a double-dip recession very close indeed, not even the richest of foreign buyers can single-handedly keep the market up for long. The numbers out over the last few months have backed this up, showing prime London prices moving in tandem with the rest of the market.

However, I have just also been sent some even more interesting numbers from estate agent John D Wood. These track not completion but exchange prices of London houses, and so are much more up-to-date than most. They also prove that prime prices are not remotely resilient.

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In the last quarter the price of a house in Kensington or Holland Park has fallen by around 18%, while that of a flat is down just under 8%. Houses haven't fared so badly in Notting Hill, but they are still down by 9% or so. Also of interest is the price of so-called large houses (3,500 square feet plus) across the capital: for these "the second quarter has witnessed values falling back by 8.5%."

This is all something poor Kylie Minogue has recently discovered to her cost. According to the Daily Mail she has just cut the price of her Kensington pad by a massive £500,000 in an attempt to get it away. And that's despite the fact that she is a mega celeb and the fact that the place was "refurbished to Miss Minogue's exact specifications by renowned interior designers and developers Candy & Candy five years ago."

It seems that whatever London's estate agents might like us to think, their patches are just as vulnerable as everyone else's. Looking at these figures, they are perhaps even more vulnerable.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.