Over recent years, London has felt the full force of economic and political uncertainty when it comes to the property market. Despite this, a strong undercurrent of demand, particularly in the prime sector, as well the relentless gravitational pull from across the world when it comes to job opportunities, has always underpinned the property market. Here are our predictions for the market for the year ahead:
The country exodus
2020 has seen many people leave the city, heading for greener pastures, more space, lower population density and lower rents/house prices. While these are all factors that have been directly impact by the Covid-19 pandemic, with the roll out of vaccines and widely felt optimism for the latter part of the year, the possibility that many will want to return to their pre-Covid-19 lives, when cities and London regain some sense of normality, is strong. No doubt the country market will continue to thrive, but London’s allure will return.
While some Londoners may continue to pack their bags, investors from overseas are still seeing the long-term appeal of investing in London. Currently, foreign investment constitutes a substantial amount of the London property market, and is considered an eternal ‘safe haven’ when it comes to investment, particularly in the prime and super prime sectors. The Emerging Trends in Real Estate report from PricewaterhouseCoopers and the Urban Land Institute named the capital the second best place for property investment in Europe, with it actually jumping two places from 2020’s estimations.
The rise and fall of house prices
Across the UK, house prices generally increased in the UK, with prices increasing in Greater London by up to 3%. However, it is expected that house prices in the same areas may drop by 2% by the end of 2021, with Central London and other prime areas faring better, with prices rising by 1.5%. The stamp duty holiday which ends on 31st March is expected to keep the market busy throughout the spring, promoting a sense of confidence which could span the rest of the year.
London rental market
2020 was a difficult year for tenants and landlords in the capital, with many struggling with payments due to job loss or uncertainty and landlords having to reduce rents.
However, as restrictions lift in the latter part of the year, tenant demand may increase once again, and supply may struggle to keep up with demand, making a buy-to-let a worthwhile investment.
Overall, while London is the first place to feel the effects of political and socioeconomic effects most keenly in the property market, the market remains buoyant and a relative ‘safe haven’ for investors, be it from the UK or abroad.
For more information or to discuss our services, contact London Building Surveyors today.