London is a vast property market, and many factors led to the recent shift in the market. Uncertainty regarding Brexit is the most significant factor which influenced that shift. However, healthy economic growth, together with massive investments and insulated lettings sector, suggest that the market will stabilize very soon. In this article, we will talk about the current London property market trends you should know about.
The overall state of the market
Sales and lettings sectors in London were showing reduced activity, mostly because of Brexit. However, in the near future, this market will be in a comeback situation, because of healthy economic growth. In the long run, factors which will influence the state of the market are house building, interest rates, and changes to property taxes. Many investors and developers are present in every single part of London, where we can expect new houses, shops, hotels, etc. One of the best examples out there is Meridian Park, where Imperial Corporate Capital is investing. This hotel facility will benefit from frequent rail connections to London and the surrounding areas. Check all further information on their website. The point is that new buildings will be seen everywhere, despite the Brexit situation and other factors. However, let’s take a look at the recent happenings with properties and lettings market.
Property prices are falling
Property prices in the capital of the UK are slowly falling since July 2017. Of course, Brexit was the leading driver of the sales fall. However, nowadays, we can expect a positive outcome with a total reversal of this downturn. Vendors are holding back because they want to achieve higher prices later on. Rightmove’s house price index report shows that 19% fewer properties came to market in January, in comparison to the same period a year ago. At the same time, there is a 5% jump in home-hunting, which shows prospective buyer interest. For first-time buyers, the market is pretty solid since reduced starting prices should stimulate growth out of this population. As we mentioned, Brexit is the leading factor in this situation, but not the only one. Stamp duty, land tax, and Brexit-related job positions all play their role.
Rents are slowly increasing
Rents are also affected by changes, mostly because of similar factors. Logically, landlords wanted to raise rents even earlier because of the government tax regime. The whole Brexit situation forced the majority of them to slow down and choose a steady income instead of raising. However, the same as the sales market, a limited supply influenced any drastic changes. Rental stock in London is down 22%, in comparison with last year. What does it mean? The lack of supply means that, despite the political situation, rents are still increasing. According to statistics, the rise is almost 5% in the last year and more. Future tendencies are mostly related to Tenant Fees Ban, which came into force on June 1. It might push up rental prices even further.
First-time buyers and millennials are relocating out
Millennials and first-time buyers were continually relocating outside of London, trying to find a better value. Research by Hamptons International says that millennials are leaving London at the highest rate since 2017. As a result, this scenario pumped up stronger growth across the United Kingdom. The property market, when it comes to millennials, has been decentralized and dispersed. In other words, the market became nationwide. Rental growth in Manchester, Birmingham, and Leeds is fueled. House prices in Birmingham are rising twice as fast as the national average.
Regardless of the political situation and other factors, London will always be the top destination for both investors and buyers. All the statistics that we mentioned are showing that the property market should be stable very soon.