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Twists and Turns Ahead for the London Property Market


23 Jul 2021

 

Fasten your seatbelts. If you think that the past 12 months in the UK property market has been a white-knuckle ride, it isn’t over yet. Smart investors will have sat on the sidelines watching the herd mentality drive prices higher under the guise of taking advantage of the government’s stamp duty holiday. What does it mean for the London market? Read on and be in the know about where the market is headed.

 

Essentially, there appears to be two conflicting narratives set to play out in the next 12 months:

  • Positive macroeconomic indicators supportive of continued growth;
  • The withdrawal of government fiscal stimulus which has driven demand and price growth over the past 12 months.

In the midst of this sits consumer sentiment. Will the dominant trend of 2020, Size, Space & Mobility continue? Probably, but it will likely slow. A recent survey conducted by the British Chambers of Commerce found that more that two-thirds of the 900 participating businesses continue to offer a hybrid model of some remote working. Major investment banks have taken a more hardline stance regarding returning to the office.

 

What does this mean for the price direction of the London market? As noted above, the market for flats took a pasting in 2020:

There are several reasons this market sector is likely to rebound in the next 12 months:

  • The return of international investors to the London market as travel restrictions are further eased;
  • The regeneration of inner city living. This has been a constant narrative in London’s evolution;
  • Stemming the population exodus. On 2 July the Home Office confirmed that 6.02 million Europeans have applied to settle in the UK as part of the EU Settlement Scheme.
  • Limited supply of new property developments coming to market.

Much depends upon the meshing of the two defining macro trends noted above. For example, if the UK went into a fourth lockdown in autumn or winter, it is quite conceivable that GDP growth and unemployment data could head in the wrong direction. In turn, this would drain consumer confidence. In this circumstance, some of the districts in Outer London which have recently prospered could be hard hit.

 

The bottom line is that the next 6-12 months will offer astute investors in London property excellent buying opportunities. But with market volatility those who fail to fully understand the fast-evolving market dynamics will fall victim to buyer’s remorse.

 

Thinking of buying London property? Be in the know, download the UK Holmes London Property Market Review now to make a smart investment.