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The south London boroughs of Merton, Croydon and Kingston saw the fastest house price growth in the year to August as the capital’s property market remained surprisingly buoyant, according to exclusive analysis by property website Zoopla for City A.M.

Price growth was much slower up in Hillingdon, Barnet and Brent, however, reflecting big differences within the London housing market during the coronavirus pandemic.

Property prices jumped 3.2 per cent in Merton in the year to August, Zoopla’s new analysis of its latest house price index showed.

Croydon was not far behind with growth of 3.1 per cent. Prices climbed three per cent in Kingston upon Thames and 2.8 per cent in Sutton.

It is the latest evidence that buyers are looking to move to leafier suburbs during coronavirus, which has spelled the end of the office commute for many.

“There is definitely a cohort of buyers who are looking for something different, maybe more space and are going further out,” Grainne Gilmore, head of research at Zoopla, told City A.M.

London house prices: The top five risers in August

BoroughAverage priceQuarterly changeAnnual change
Merton£507,8000.4%3.2%
Croydon£376,7000.8%3.1%
Kingston£517,0001%3%
Sutton£395,6000.4%2.8%
Newham£375,8000.7%2.8%
Source: Zoopla

Yet she highlighted that some areas closer to London’s centre had also seen a sharp rise in prices.

House prices in Newham rose 2.8 per cent in the year to August for example, and they rose 2.7 per cent in Hackney.

Tower Hamlets and Lewisham both saw growth of 2.6 per cent.

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“A lot of demand is still remaining within the city,” Gilmore said. “People are maybe looking at different types of properties within the city, and that’s underpinned by the pricing we’re seeing in some of these areas.”

London house prices to face headwinds

The overall UK housing market has experienced a surprising surge during the coronavirus pandemic. That is despite the country entering an historic recession.

It has been boosted by the release of demand that was built up when the property market was shut down in the spring. Chancellor Rishi Sunak’s stamp duty holiday – which has raised the payment threshold to £500,000 until March – has also bumped up activity.

Zoopla’s August house price index showed that prices grew 2.6 per cent year on year, taking the average to £218,000.

In London, house prices grew 2.1 per cent in August. The average house in the capital cost £476,000.

However, experts caution that the housing market will face strong headwinds in the winter and next spring. Rising unemployment as government support is wound down and new coronavirus restrictions are two obvious problems.

London house prices: The top five fallers in August

BoroughAverage priceQuarterly changeAnnual change
City of London£788,100-0.9%-0.7%
Hillingdon£413,3000%0.4%
Barnet£539,2000.2%0.5%
Brent£486,8000.2%0.7%
Ealing£477,8000%0.9%
Source: Zoopla

Zoopla’s London analysis showed that the recent rise in house prices is highly localised.

Prices in the City of London fell 0.7 per cent year on year, for example, although Zoopla cautions that the sample size is not big enough to draw reliable conclusions.

Prices in Hillingdon grew just 0.4 per cent in the year to August, while Barnet saw a 0.5 per cent rise. Brent house prices have climbed 0.7 per cent.

Kensington and Chelsea remained by far the most expensive borough. The average house cost £1.17m in August. Westminster was second at £955,000, while the City was third at £788,000.

By Harry Robertson

Source: City AM

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