In recent years, the city’s house prices have been growing more slowly than elsewhere precisely because of their high value, says Ashley Webb, UK economist at consultancy Capital Economics. When interest rates started creeping upwards beginning in December 2021, that meant “mortgage affordability was crimped more strongly in areas where it was already more stretched than elsewhere”. Higher interest rates have hit London harder because “if you already need to borrow a lot of money relative to your earnings to pay for the average house price, higher interest rates means you can afford less”, Webb says.