London house prices set to rise another £27,000 this year despite economic headwinds

London house prices are set to rise by another £27,000 before the end of the year as cost of living pressures and soaring interest rates are doing little to quell strong demand for homes in the capital.

Kensington and Chelsea will see the biggest jump in property value of any London borough with an average £68,103 rise, according to data from estate agent Benham and Reeves, followed by Westminster with a £47,222 rise.

The City of London will see a £41,519 jump in average property values, while prices in Camden will grow by £41,493. The average UK house price is set to rise 5%.

Benham and Reeves director Marc von Grundherr said: “We keep waiting for house prices to plateau, but it’s just not happening.

“The pandemic-inspired boom in demand and value has supercharged the housing market to such an extent that it seems even a cost of living crisis and soaring interest rates can’t stop it in its tracks.”

It comes after the chief executive of property firm Savills said he continued to expect luxury London homes to swell in value despite growing expectations of a UK recession.

Savills boss Mark Ridley told the Standard: “We’re still positive about the premium market in the year to come and beyond.

“We’re still predicting house price growth at the upper end.”

Cash-rich buyers at the top end of the market were less exposed to rising interest rates as they tend to borrow less when investing in a new home, Ridley said, adding a shortage of housing stock was also slowing down transaction rates and pushing up prices.

The average price of a property sold by the firm in the past six months has grown by 16% to hit £2.2 million.