London property prices are holding and in some price rising in value while the downturn is hitting the markets in the rest of the country, according to the latest research from the FT House Price Index.

House prices overall dropped 0.3% in July but the fall would have been twice that if London figures were removed.

Property in the borough of Kensington and Chelsea showed the largest gain in the three months to July but during the same period, prices throughout the capital registered a rise of 4.6%. However, the Square Mile lagged behind the rest of the London market: prices in the City fell by 14.7%.

The Financial Times explain the disparities between their figures and those released by other trackers, including Halifax and Nationwide because their method tracks completed sales, rather than agreed mortgages. According to the FT, ‘Those data take longer to show up than figures passed on by lenders, whose indices are based on mortgage approvals rather than transactions that have actually been concluded. Also, the FT Index includes properties purchased without a mortgage. Almost 40 per cent of UK homes are owned outright without a loan and these sellers are able to bypass mortgage lenders.’

Peter Williams, chairman of Acadametrics which compiles the FT Index, said these differences meant ‘it is bound to diverge from the mortgage offer indices . . . which have been reporting more dramatic declines based on their own lending data’.

However, he said that all indices were pointing broadly in the same direction – downward – with varying degrees of severity.

The latest FT data show prices falling in five out of 10 regions, with the East Midlands suffering the greatest annualised decline over the past three months of 2.6 per cent. House prices in Wales have fallen by 2.3 per cent while those in the north-west have fallen by 1.5 per cent. However, some areas continue to register strong price rises. Windsor and Maidenhead saw average growth over the past three months of 14 per cent on an annualised rate while the equivalent figure for Northumberland and Buckinghamshire was 8.8 per cent.