House prices in some of London's most expensive boroughs have suffered double-digit falls as a North-South divide opens up in the property market.

Official figures showed prices in the City of Westminster, which includes parts of Mayfair and Knightsbridge, tumbled 12.7 per cent in the 12 months to February.

That cut the value of a typical home in the borough by around £127,000 from close to £1million to £872,000.

Neighbouring Kensington & Chelsea saw an 11.2 per cent slump worth an eyewatering £155,000 to leave the average home valued at £1.23million.

There were also double-digit percentage falls in the City of London, down 11.2 per cent, and Tower Hamlets, off 11.6 per cent, as average prices across inner London dropped 5.6 per cent or nearly £37,000 to £623,000.

And prices were down 0.9 per cent in the South-East and 0.6 per cent in the South-West.

By contrast, prices across the UK as a whole were up 1.2 per cent with Yorkshire and the Humber seeing rises of 3.9 per cent while the North-East enjoyed a 3.6 per cent gain and the North-West was up 3.4 per cent.

Property experts blamed the slump in London – which came before the Iran war erupted – on higher taxes on entrepreneurs and the wealthy under Labour.

Stacy Eden, a partner at consulting firm RSM UK, said: 'The situation in London is particularly concerning. 

'London is most impacted by the high levels of stamp duty. London is also a more international market compared to other UK regions, and therefore more sensitive to challenges damaging international investment such as high levels of taxation, high regulation, and UK economic volatility. 

'The mansion tax on properties worth over £2million also disproportionally affects London.'

Lucian Cook, head of residential research at Savills, said parts of London have been hit particularly hard by higher mortgage rates because house prices are higher.  

'It's been quite a long and drawn-out process for London to recalibrate itself against the rest of the country in terms of house prices and that adjustment probably has some way to run,' he said. 

But he added that central London was reeling from higher taxes.

'In central London in particular, the housing market is much less about the cost of debt,' said Cook. 'It's more about international equity and the tax environment and we've seen a succession of tax changes that have played against that market.'

Tom Bill, head of UK residential research at Knight Frank, said: 'The tougher tax landscape, which includes fewer incentives for wealthy overseas investors and higher rates of stamp duty, means buyers have been more hesitant over the last decade.'

Property experts believe worse could still be to come, with the impact from the Middle East conflict and higher mortgage rates further decimating prices in the south.

The data from the Office for National Statistics is lagging the conflict in the Middle East and will only start to reveal its impact in the coming months.

Barret Kupelian, chief economist at PwC UK, said: 'The housing market is no longer moving as one country, but as two. The UK housing market is still living with a pronounced North-South divide. London and the South East remain under pressure while the North continues to move ahead.

'The question now is not whether the market softens, but by how much. The Autumn Budget uncertainty of last year may be behind us, but events in the Middle East have replaced it with a fresh fog: uncertainty over interest rates, volatility in swap markets pushing up mortgage pricing, and the risk of higher than initially anticipated inflation for longer. Add in the introduction of the Renters' Rights Bill, and a cooler housing market would be a natural consequence. 

'In short, the housing market is in a cautious phase. Once the fog begins to lift on rates, inflation and regulation, activity should start to recover.'