The London location where house prices are rocketing isn’t Chelsea — it is Tower Hamlets

31 Westferry Circus and 46 Westferry Circus in London’s Tower HamletsWikimedia Commons / CC 3.0

LONDON — House prices in prime central London areas may be the highest in the UK, but it’s outer areas of the capital like Tower Hamlets where prices are rising the fastest.

Areas in prime central London remain eye-wateringly expensive, with the average house in the exclusive west London borough of Kensington and Chelsea selling for over £1.9 million, according to Rightmove.

However, growth in prime central areas has been slowing for several months, with the likes of Knight Frank measuring drops of up to 14% year-on-year last month.

Meanwhile in outer London prices continue to rise dramatically, albeit from a much lower point — the average house price in the Greater London borough of Tower Hamlets is a comparatively affordable £522,457, according to Rightmove.

Take a look at the graph comparing house price growth in Chelsea and Tower Hamlets between 1995 and 2016.

It’s taken from Barclays’ latest Housing Chartbook below, which is compiled using Land Registry data, and is expressed as a percentage of each area’s average property values in February 1995:

Barclays Housing Chartbook, February 2017

The disparity in growth rates is even more dramatic when the last two years are charted:

Barclays Housing Chartbook, February 2017

It’s a useful example of a wider trend: house price growth in “up-and-coming” areas continues to grow rapidly as buyers are priced out of central locations, while property value the capital’s most exclusive boroughs appear to have peaked — at least for now, with Savills predicting a return to growth in 2019.

Rob Weaver, director of investments at property crowdfunding firm Property Partner, said in a statement: “While prime central London has hit something of a wall, outer London boroughs are still recording double-digit price growth.

“The Crossrail effect and certain regeneration areas seem to be having an impact. The closer we get to the stations opening next year, buyer demand should intensify by the attraction of shorter commuting times,” he said.