The areas that will be most protected from falling house prices

Oxford, York and parts of London are among the areas that will be most protected from falling house prices, new analysis has revealed.

House prices are forecast to fall by an average of 12pc in 2023, according to Oxford Economics, a research consultancy – but not all areas will be as badly affected.

The London borough of Kensington and Chelsea is the most “recession-proof” area, according to buying agents Garrington Property Finders.

This was followed by Westminster and Camden in London, Swansea in Wales and Oxford.

Jonathan Hopper, of Garrington Property Finders, said: “Prime London postcodes, as well as several popular university cities, are the most likely to escape relatively unscathed.

“Homeowners in these markets often have a good chunk of equity under their belts and are therefore more insulated from rising mortgage costs.

“Unlike much of the country, the three London boroughs in our ‘most resilient’ top 10 also saw prices fall last year, making them less prone to further correction now and thus an attractive proposition to buyers looking for stability.”

The ranking of the 96 most-populated local authority areas was based on factors including the levels of mortgage debt, the proportion of first-time buyers and price changes in the past year.

Kensington and Chelsea has a high level of homeowners who do not have mortgages, who are unaffected by rising mortgage rates.

Mortgages account for only 7pc of the total value of homes in the borough. Those that do have loans tend to have smaller levels of debt than people living in other areas.

Kensington and Chelsea also has very few first-time buyers, which were considered most likely to sell up in the face of unaffordable mortgage payments.

This is because they are already spending 39pc of their take-home pay on a mortgage, close to levels seen in the run-up to the financial crisis. First-time buyers also tend to have less savings to fall back on when mortgage payments become unaffordable.

House prices in Kensington and Chelsea already fell by 7pc in the year to November 2022, which means they are less likely to suffer a large plunge, researchers said.

A high population of wealthy buyers is also expected to prop up house prices in Westminster – Britain’s most unaffordable property market.

The average home there costs 15.6 times the average resident’s salary. Prices fell 6pc in the past year, levels of mortgage debt are low and there are few first-time buyers.