Read our January evaluation of the London property market.
Key highlights include:
- The headline grabbing news is the UK’s exit from the EU. The impact on the economy remains to be seen, as the difficult task of negotiating new trade deals with the EU and the rest of the world will now begin in earnest. For the time being, although GDP growth is sluggish, various forecasts have suggested the outlook is favourable when compared with many other developed economies – assuming no major shocks.
- Meantime, employment is at record levels and wages growth remains above inflation. Interest rates are likely to stay low provided the economy shows reasonable growth, which means that the pound is expected to remain relatively good value for foreign buyers for most of the rest of this year at least.
- The impact of the General Election on the residential market has been dramatic, especially in London. The political certainty that a Conservative government offers – including Brexit done and dusted and the removal of the threat of opposition parties’ more extreme policies (e.g. rent control) – has brought buyers back to the market in abundance. What is lacking now is stock, vendors have yet to come to the party in anything like the same numbers, which is having a positive impact on prices. While prices in the wider Greater London market are still falling on an annual measure, the prime locations are seeing a return to modest growth and Chestertons has seen multiple bids on a number of properties reflecting the scarcity of available stock.
The new homes market in London continues to suffer, with latest data showing a 5% drop in sales in 2019. At the end of last year, nearly 34,000 properties (nearly 30,000 of which under construction) remained unsold and many developers have been offering discounts or incentives to shift units. Interestingly, the share of build-to-rent sales has also dropped which may reflect investors seeking better opportunities outside London.