What's happening with London property — is Brexit-related uncertainty starting to take its toll?
Here we take a look at the data and uncover the truth about London house prices.
There has been a huge amount of speculation about how the Brexit vote will affect London house prices.
The Bank of England (BoE) predicted prices could slump by up to 20% as a direct result of the UK leaving the European Union, and the media was quick to declare a ‘market crash imminent’.
Most of today’s millennials will be praying for market collapse, but, for homeowners and investors, it’s most likely a different story.
So How Have London House Prices Been Affected By Brexit So Far?
Prices certainly haven’t plummeted as some publications have made out, but the housing market has slowed since the referendum.
To put this into context, in the run-up to the vote last summer, house prices had been rising by around 8% each year. In the 2014 peak, London property prices actually rose a mammoth 18% in a year.
More recently however, a report from Nationwide has shown that prices fell by 0.6% for the year to the end of September, with the average price of a home in the capital now standing at £471,761.
Though this annual price drop is very slight, it is the first time prices in the capital have dropped since the height of the financial crisis in 2009.
Is A Market Crash Imminent?
While Nationwide’s report does reveal a “marked slowdown” - or a price correction as some are calling it - it doesn’t indicate that a house price crash is imminent.
Many economists, including Robert Gardner, Nationwide’s chief economist, believes that the lack of property to buy in London will continue to prop prices up:
“Low mortgage rates and healthy rates of employment growth are providing some support for demand, but this is being partly offset by pressure on household incomes, which appear to be weighing on confidence. The lack of homes on the market is providing ongoing support to prices.”
House Prices Are Still On The Up In Certain Boroughs
London may have experienced a slight annual price drop, but it’s important to note that the outer London boroughs are still seeing property prices rise.
Mark Lawrinson, Portico’s Regional Director, says, “It’s the capital’s luxury, centrally-located properties that are swaying the overall figures, as pockets on the fringes of the capital are still seeing healthy price growth.”
So Is Now A Good Time To Buy?
Here’s what the housing experts think:
“First time buyers are in a good position right now because they don’t have a house to sell - so a slight drop in prices will come as good news. Plus - from new ISAs and Help to Buy, to buying with friends and shared ownership, there are lots of options available to help hopeful homebuyers get on the market.
In addition to this, mortgage interest rates are at a record low of 0.25%. Rates won’t stay this low for long - so buyers should act quickly if they want to secure a fantastic, cheap deal.” Mark Lawrinson, Portico Regional Director.
Find out about the latest Help To Buy initiatives and ideas to help you get on the property ladder in London.
Help To Buy: Landmark, The Broadway, Loughton. 2-bedroom properties start from £395,000
View help to buy properties for sale in Loughton.
Help To Buy: Clissold Quarter, Stoke Newington, N4. 1-bedroom properties start from £532,500
View help to buy properties for sale in Stoke Newington.
What If I Want To Sell My House?
“If you’re selling to buy, you will have a big chunk of equity which you can leverage to your advantage, so you shouldn’t worry too much about small market fluctuations. And if you're planning on upsizing, the good news is that you'll likely save money on your new purchase.
However, the most important thing you should consider when thinking about buying or selling property is whether it is the right time for you. What’s going on in your life, such as a getting a new job or thinking of starting or expanding your family, is much more important than market oscillations.” Mark Lawrinson, Portico Regional Director.
London is suffering from a “lack of affordability” with an increasing number of people now unable to participate in the market. This has resulted in over a third of London listings being reduced from their original asking price, according to online estate agents Zoopla.
View our recently reduced properties for sale.
Make Money Until Your Home Sells
If your vacant house is on the market but you are yet to receive much interest, why not put it on Airbnb? Every day it’s sitting vacant is potentially losing you money, so it really does pay to get on board with Airbnb in short-term.
Plus - it doesn’t matter if you don’t have the time or know-how to make it work, Portico Host is a complete Airbnb management package, so all you need to do is let us know when you’d like your property rented out and we’ll get to work.
Give us a call on 0207 099 4000 for more information on our Airbnb management service.
Ultimately, it’s impossible to accurately predict what will happen to the housing market, and Brexit and the General Election have made things even more uncertain. However, while we do expect prices to begin to level off, we also think buyers and sellers will start feeling more confident toward end of 2018 when the Brexit negotiations finish.
Are you considering buying, selling or letting a property in London? Give us a call on 0207 099 4000 to find out how we can help.