Capital punishment! London is hit by house price plunge - but how are property prices doing in YOUR area?

House prices in London have continued to plummet, new data has revealed. 

Property values in two-thirds of London's postcodes plunged in the last year while the rest of Britain recorded slow growth. 

The latest House Price Index (HPI) by estate agent Purplebricks showed that house values fell in 23 boroughs across London and only rose in ten over a 12-month period to August this year. 

It comes amid an apparent slow-down in the market, with the average cost of a home in the UK rising by just 0.9 per cent annually and a measly 0.3 per cent from July to August this year. 

The biggest loser in the report was the Royal Borough of Kensington and Chelsea – which saw house prices drop by an average of £192,084 in the past year. 

Homes in the City of Westminster and the City of London also saw their values fall by £148,015 and £124,071 respectively.  

The latest HPI report will make grim reading for Chancellor John Healey ahead of next week's Budget. 

Despite reportedly dropping plans to extend the so-called 'mansion tax' to thousands more homes, property prices on the higher end have already started to feel the hit. 

Properties worth more than £2million decreased in value by an average of £284,000 amid concerns over Labour's incoming mansion tax. 

Under the controversial plans, houses worth £2million or more will be subject to an additional annual tax bill of between £2,500 and £7,500 per year from April 2028.

Experts say the demand for high-value homes, many of them in the capital, has fallen since the levy was first announced by former chancellor Rachel Reeves in last year's autumn Budget.

Homes in Andy Burnham's north of England fared better than the South and the capital.   

The North East of England recorded the highest annual price growth of 3.2 per cent – worth £5,105 – pricing the average property at £165,640. 

The North West of England saw house prices grow 2.2 per cent – worth £4,810 – and meaning most homes are worth around £220,393 today. 

The Manchester borough of Trafford was the second best performing area in the UK, with prices rising by £23,682 to £393,897 – some £150,000 over the Greater Manchester average. 

Homeowners in Wales and Scotland saw some of the greatest house price growth over the last year, with rises of 3.1 per cent and 2.9 per cent respectively.

The average Welsh property is worth £216,363 while most Scottish homes are valued at around £198,397, as of August this year.

Homes in England saw a meagre rise of just 0.4 per cent over the year, and just 0.2 per cent from July to August, pricing the average property at £293,525. 

Despite the doom and gloom in the capital, the borough of Kingston upon Thames recorded the strongest price growth with £27,645 added to average homes, now worth £597,587.

London's commuter belt also performed well, according to the report. 

Homes in the leafy commuter town of St Albans in Hertfordshire are now £655,974 after an annual price bump worth £20,539. 

The Surrey district of Epsom and Ewell is another growth spot, with prices rising £17,810 to an average of £566,163 over the year. 

Out east, Barking and Dagenham homes have also risen in price to an average of £369,881 after an annual bump of £16,740. 

Tom Evans, Sales Director at Purplebricks Estate Agency, said: 'While this isn't the outcome many homeowners wanted, the latest data shows just how subdued the property market has become.

'With mortgage approvals at their lowest since the start of 2024, buyer enquiries weak and mortgage rates climbing to 6%, affordability remains the biggest barrier to people making their next move on the property ladder, while enabling those at the bottom to get a foot on it.

'However, we're confident this is a period of adjustment rather than a trend and with wages continuing to grow, there are reasons to be optimistic about the longer-term outlook.'

Estate agents are warning that house prices will continue to fall over the coming months with fewer buyers out house-hunting and fewer sales being agreed.

This bleak outlook is revealed in the latest survey from The Royal Institution of Chartered Surveyors, which asks its estate agent and surveyor members what they are seeing on the ground.

Lloyds Bank reported last month that house prices remain at a standstill with the average property value the same as it was a year ago. 

Much of the market slowdown is being attributed to higher mortgage rates putting pressure on what people can afford to buy.

Average fixed rate mortgages hit 6 per cent this month with most sub-5 per cent fixed rate deals vanishing.

Experts also say buyers are concerned about property tax hikes that could appear in the October 28 Budget.

Tom Bill, head of UK residential research at Knight Frank said: 'There is pain in the post for the UK housing market as the impact of higher mortgage costs filters through the system.

'Higher borrowing costs will increase downward pressure on prices and transaction volumes in the final months of the year.

'The situation could be exacerbated as buyers and sellers speculate about which of the recurring tax rumours ahead of the Budget proves to be true.'