Latest Insights on London Property Market
A recent report sheds light on the current state of the London property market, revealing some interesting trends.
Demand for property in London remains somewhat uncertain, despite the Bank of England's decision to freeze the base rate in the previous month. While there was a 12% increase in new prospective buyers in London between August and September, it's important to note that this is only half the growth rate witnessed in the prior two years.
In the prime London markets, the annual rental value growth continued its downward trajectory in September. This decline can be attributed to an increase in supply while demand remained relatively stable. Notably, the number of new prospective tenants in prime London postcodes was on par with the five-year average for the third quarter of this year.
The annual rental value growth in prime central London (PCL) reached 11.2% in September, marking the lowest figure seen in the past two years. However, there's a noteworthy observation regarding property listings in PCL. According to Rightmove, the listings were down by only 12%, a stark contrast to the 37% decline witnessed in the same quarter the previous year.
Tom Bill, Head of UK Residential Research, commented on the situation, stating, "The Bank of England paused its cycle of interest rate hikes in September, but demand for residential property remains fragile. While the number of new prospective buyers in London rose 12% between August and September as this year's autumn market began, it was half the increase experienced in the previous two years. In calmer political times before 2016, the same jump exceeded 40%."
As forecast suggests a 3% decline in both prime central and outer London markets for this year. These markets are expected to outperform the rest of the UK.
Looking at the broader UK property market, the number of new prospective buyers across the country was 11% lower in the third quarter of this year compared to the five-year average. However, London saw a 13% increase, indicating relative resilience in the capital. Additionally, there was a 14% rise in property exchanges in London, even as sales volumes dipped by 9% nationwide.
One key reason for London's resilience is the fact that average property prices in prime central London are still 16% below their peak in 2015. In prime outer London, prices are 8% lower than that peak. Furthermore, average prices in London are currently 2% lower than they were before the pandemic, which has contributed to transaction volumes being 7% higher than the five-year average in September.
Tom Bill added, "In a departure from what took place after the global financial crisis, property prices in London have been far less volatile than the rest of the country during this latest period of economic turbulence."
Looking ahead, a return to more normal levels of rental value growth from 2024 as the imbalance between supply and demand gradually reduces. The forecast includes 5% growth in prime central London and 4.5% in prime outer London for the coming year.
Achieving success in the real estate industry is a gradual process. If you're thinking about selling or renting out your property, feel free to contact us. We're here for a casual conversation, guidance, or a free home appraisal.
Shiv Gadhvi
📱 +4420 8861 2121
📧 Shiv@peaksons.co.uk
