'Prime' house prices may crash harder than the rest

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.