The London Property Market – an opinion

The property industry has much to contend with at the moment. The last couple of weeks have seen the economy and financial markets in turmoil.  As the property market is reflective of both, it’s not surprising that there is a feeling of nervousness around investment.

At London Building Surveyors we have seen a decrease in enquiries for full surveys and an increase in enquiries around Party Wall matters.  As is often the case in periods of economic uncertainty, those who require more space to accommodate growing families, appear to be considering extending their existing properties.  This is no doubt a result of mortgage rate increases in-line with the Bank of England interest rate hikes to try to curb inflation.  Is extending the best solution though? The price of materials are ever increasing and with the current shortage of skilled labour in the UK, extending a property is more expensive than ever.

In the “mini” budget, the chancellor, Kwasi Kwarteng, confirmed a permanent stamp duty cut, with no tax to be paid on properties up to the value of £250,000.  He also increased the threshold for first-time buyers to £425,000.  Whilst, these cuts are enticing for first time buyers, the harsh truth is that changes to interest rates means that mortgages are at their most costly since 2008.  If first time buyers cannot afford increased payments, then cuts on stamp duty aren’t going to stimulate the market.

So, what does all this mean for our outlook on London property over the next year?  Well, it’s a tough one to call!   Whilst London property prices haven’t increased as much as prices in other areas of the country, they haven’t dropped either.  The property market in London has emerged from Brexit and the pandemic in a much more unscathed state than anyone could’ve predicted.  Without doubt, the short-term outlook is bleak – it IS going to be a tough Winter, but Britain is not yet in a recession and whilst we think there may be a temporary drop in prices, we don’t see this as ongoing concern.  We believe that in the mid to long-term the London property market is robust enough to withstand short-term economic instability.