The commuter towns where the house price slump will hit hardest

Commuter towns will be hit hardest by falling house prices, new analysis has revealed.

Values are forecast to plunge by an average of 12pc in 2023, according to Oxford Economics, a research consultancy – but some places could be even worse affected.

The area expected to record the biggest falls is Luton in Bedfordshire, according to analysis by buying agent Garrington Property Finders. This was followed by Watford in Hertfordshire and Dartford in Kent, all areas which are popular with workers commuting to London.

Other commuter areas that made the list were Aldershot in Hampshire, Slough in Berkshire and the London boroughs of Croydon and Barking and Dagenham.

It comes as strikes continue to paralyse train networks, making commuting from these locations almost impossible, which is one of the key reasons that people move there.

Jonathan Hopper, of Garrington Property Finders, said towns that recorded “very rapid post-pandemic rises and lots of first-time buyers” in the past year were more likely to experience sharper price falls in 2023.

He said: “For tactical buyers looking to secure a big discount, these more exposed areas could throw up some strong buying opportunities this year.”

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.

Commuter towns such as Luton have high levels of homeowners with larger mortgages and smaller deposits, which makes them more vulnerable to rising interest rates.

They also have more first-time buyers than other areas, who were considered most likely to sell up in the face of unaffordable mortgage payments. One in 10 homeowners in Dartford are first-time buyers.

These homeowners are already spending 39pc of their take-home pay on a mortgage, close to levels seen in the run-up to the financial crisis, and tend to have less in savings to fall back on when mortgage payments become unaffordable.

House prices rose sharply in these areas over the past year, which made them ripe for a correction, according to researchers.

Prices in Luton surged 13pc in the year to November 2022, while in Dartford they were up 12pc.

Neal Hudson, of the analyst BuiltPlace, said the areas that were identified as weak spots were the cheapest areas in the South. He added that first-time buyers have piled into these areas in their search for places they can afford that would still be commutable to the capital.

James Greenwood, of buying agents Stacks, said these areas became more popular last year as hybrid working took hold, which pushed up prices.

He said workers in London moved farther afield as they looked for bigger, more affordable homes that were more suitable for remote working a few days a week. But they still wanted to be able to get to the office when needed, so these places offered the right balance.