Latest London Property News: July 2022
Prices have risen rapidly across the prime London housing market since the pandemic hit but there are signs that growth rates will slow in the second half of the year. It’s worth remembering that average prices had fallen in the years leading up to the pandemic as higher taxation and Brexit dampened demand for housing across London’s prime postcodes.
There were some signs of a rebound in the early months of 2020, but it was the housing market reopening in the summer of that year which marked the real turning point. A combination of drivers including the stamp duty holiday contributed to high levels of demand from buyers and prices rose rapidly, nearly reaching their previous peak recorded in 2015. However, the current economic and political uncertainty means it is likely that price growth – which has been relatively flat in the first six months of 2022 – will slow further over the course of the second half of the year.
A lack of homes available for sale combined with high levels of demand has been an important factor in supporting price rises since the pandemic hit. The number of new instructions bounced back following the reopening of the housing market in the summer of 2020 and have remained consistently higher than the levels recorded in the years preceding the pandemic – 20% higher in June than the 2017-19 average.
However, higher levels of sales have helped shrink the number of homes available for buyers to purchase. This has helped fuel the house price growth seen over the last couple of years as buyers compete for the limited number of homes available to purchase. Activity levels may have fallen since the end of last year’s tax holiday but they are still higher than the levels seen immediately prior to the pandemic. Although sales have fallen from last year’s highs, some parts of the market have continued to show robust signs of activity.
The top end of the market - homes priced above £5 million - is still recording activity levels in line with 2014 and sales in the year to June were 11% higher than the same period last year. Meanwhile, the market for houses remains robust but the market for flats continues to struggle in a post-pandemic world where space – inside and out – has been notched up the buyers' wish lists.
As we head into the summer holidays our attention is increasingly focused on what might happen during the autumn. The housing market is seasonal with most new listings and offers taking place in the spring and autumn – unless a pandemic or tax holiday gets in the way. Therefore, the big question facing not just the prime London market but the whole country is what will happen to new listings in the autumn and will demand from buyers hold up in the face of the growing economic and political challenges.
While the cost of living crisis and rising interest rates may dampen broader demand for housing in more mortgage-dependent markets, there could be some negative impact on the prime London markets too. That said, some buyers may look to invest in real assets, including property, as a hedge against inflation. This could sustain buyer demand in markets like prime London for longer than elsewhere.
However, low rental yields in central London could prove to be a barrier. While there are no imminent signs of a rush of new instructions of homes for sale, this will be an important indicator for the health of the market in the coming months.
Jaffray Estates Moves To New Offices
I am pleased to announce after much back and forth though through various lock downs, we are now in new offices ideally located in the very centre of London at 42 Upper Berkeley Street, W1H 5QL. Drop by for a drink and say hello.
Just Sold:99 Baker Street, Marylebone, W1U | £1,300,000
Jaffray Estates have just sold a two bedroom apartment in this popular modern block on Baker Street in excess of the guide price.