Has your home's value gone up or down?

The terrorist attacks on 11 September have had repercussions all around the world. In Britain the knock-on effects have been felt in everything from stock market prices to West End theatre. Now it has emerged that even London property prices are suffering as a result.

In the immediate aftermath of the World Trade Center attack, house prices in the capital fell by six per cent, according to data from the Land Registry.

Figures revealed today show how the most expensive areas - places like Kensington and Chelsea - are the ones worst affected, while far fewer homes in the £1million-plus bracket are changing hands than before.

Prices in London's cheapest boroughs are continuing to rise, however, as more and more people are driven out of the centre in their search for affordable homes.

Given that the average price of a London home is just over £203,000 that is hardly surprising. That Land Registry figure is higher than that given by mortgage lenders, because it covers every single sale, including high-value property.

Since the end of September average house prices in Kensington and Chelsea have fallen by 12 per cent. As a result, there was a fall of three per cent in 2001 as a whole - the first time in years that house prices have fallen in London's most sought-after area.

The average house price in the royal borough is still £567,500 - by far the highest in London. However, estate agents have been reporting since October that property sellers are having to accept offers between five and 15 per cent below the asking price. This trend has been translated into lower average sale prices.

It is the same story south of the river. In Richmond and Wandsworth, where prices had been rising rapidly in the past three years, the economic slowdown has caused a reduction of 10 per cent since September. During 2001 prices in Richmond rose by four per cent and in Wandsworth by six per cent.

Economic uncertainty also hit Hammersmith and Fulham and Ealing, where prices have fallen by nine per cent since September, reducing the annual increase to only three and six per cent respectively.

Despite these falls, however, property in London remains the most expensive in the country. Average prices in the capital are still 75 per cent higher than the country as a whole. One of the most notable changes since 11 September is that the old adage "west is best" for rising property prices is no longer true. The areas where prices are still going up are now definitively in the East End and beyond.

The only parts of London where prices have continued to rise since September have been Newham (up 12 per cent) and Barking and Dagenham (up eight per cent). Newham, which saw prices rise by a massive 26 per cent during 2001, is the new Hackney. The borough, now a magnet for investors attracted by its potential as a transport hub, is still the second cheapest in London.

However, the average flat in Newham now costs more than £125,000 - double the cost of a flat in Barking and Dagenham and beyond the reach of most key workers. Local agent Ken Barnett, of Strettons, said: "Much of the East End still offers good value for money compared with other parts of London.

In addition, many areas are going through transformations and improvement which sustain demand and push up prices."

Of 27 new flats at The Q Building in Stratford, half are already under offer although the prices are high for the area - £156,000 to £285,000 for one and two bedroom flats - and completion will not be until the autumn at the earliest.

The other two unexpected star performers are Redbridge (annual rise 25 per cent) and Waltham Forest (24 per cent). Redbridge, on the Essex borders, used to be known as the home of market traders and cab drivers; now there is no doubt it is going up in the world.

With average prices now more than £161,000, Redbridge has leapfrogged Lewisham, Greenwich and Croydon, as well as leafy Enfield and Sutton, and is becoming less Essex and more Epping Forest. In most of the rest of London the increases for 2001 are mostly in double figures, although prices hardly moved in the last three months.

Outer suburbs like Barnet, Bexley, Bromley, Enfield, Kingston and Croydon recorded annual property price rises of between 12 and 15 per cent. In those areas estate agents are secretly relieved that prices have now stopped rising, as homes were fast being priced out of the reach of many buyers.

Finchley estate agent Jeremy Leaf, who is regional spokesman for the Royal Institution of Chartered Surveyors, said: " Sellers who want or need to move quickly are being flexible when they receive offers below what they may have liked, and we do not anticipate the situation will change much for a while.

"At the same time there is evidence that first-time buyers and investors are making the most of their increased bargaining power."

There are signs that London prices generally have stopped falling, even if they are not rising substantially. The HomeTrack Index, which collects information from hundreds of London agents, found that prices have risen since the new year - but by a mere 0.1 per cent .

The sharpest impact of the 11 September disaster was at the top end of the market. Between July and September 2001, 487 houses and flats were sold in London for more than £1 million. Between October and December the number plummeted to 305. Sales at more than £2million, which peaked at 109 between July and September, fell 70 per cent to 64.

While multi-million-pound sales were affected everywhere, the hardest hit were less central areas. In Wandsworth, the number of sales at more than £1million plummeted from 29 to 10. In Richmond they fell from 38 to 20 and in Camden from 36 to 20.

The up-and-coming areas
Key workers left to rue the ripple effect
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