It’s been a month since the London property market reopened. So how are things going?
On May 13 the UK government authorized the property sector to reopen for business. Since then the market has seen a spike of activity that is very promising but question is, is it a real predictor of things to come? In this article, I’m giving you the latest London property market update so you can be fully informed.
Given that we are still in the midst of a pandemic and we’ve starting to see the UK economy open up, there is a lot of uncertainty as to what is happening with London property. For many buyers they are wondering if now is a good time to buy or should they wait to see if there further price declines. For many sellers they are hearing of price reductions so are choosing to hold off on putting their home on the market. There’s always a lot of “noise” with headlines, so let me give you some key data points to consider.
The biggest current dynamic is that since the unlocking of the market, we have seen a surge in buyer activity. According to HMRC, 48,450 homes were transacted in May when the market was reopened. Though that is a 50% volume decline from a year ago, there was immediate activity as soon as the green light was given to transact again.
As of the end of June, according to online property portal Zoopla, the average price for a London property was £595,443, a decline of 10.35% from a year ago and a 3.75% decline since March 2020. In terms of property types, flats in London sold for an average of £482,968 and terraced houses for £641,158.
It is predicted that in London prices will fall this year on average 5% from last year. Forecasts are that they will rise 2% in 2021 and 4.3% in 2022. Before the pandemic kicked in in the UK, forecasts were for 2% rise in 2020 and 2.8% rise 2021, so you can see the impact of the pandemic on forecasts.
Another cause for concern is that while we still have a pandemic going on, Brexit is still an unknown as the government is in the midst of negotiating with the EU and other countries.
What is your biggest concern about the London property market? Leave me a comment below.
While those numbers are dire, buyers are jumping back in the market. Registered applicants, which is the first sign of buyer interest has doubled or more for many estate agents compared to the figures during the 51 days of complete lockdown. Many buyers are jumping in to take advantage of fewer buyers in the market, price declines and low interest rates. The average 2 year fixed rate mortgage is in the range of 2.09%, while the cheapest deal seen is at 1.09%; the cheapest 5 year deal we’ve seen is at 1.34% with a 60% Loan to Value.
With that kind of buyer confidence, it may mean that prices will recover quicker than currently forecast. Having said that, no one knows how the economy will fare and the employment picture will pan out in the next 12 months. The government has propped up the economy through its furlough scheme that is starting to get scaled back and will eventually be eliminated. We will definitely see more unemployment as some workers lose their jobs.
I hope this article has given you a snapshot of what is currently happening in the market. At the end of the day, housing is an essential need and there will always be buyers/sellers who need to transact. It’s important to do your homework for your particular situation and area where you live or want to buy.
If you have specific questions about the London property market, drop me a comment below.