London Property Market Forecast 2022
What is the London Property Market forecast for 2022? In this article, I share the London property market insights from 2021, as well as look to the year ahead to see if now is the time to invest in London property.
Based on the market forecasts for London property, and looking at the previous year in the property market, you may be considering investing in London property, so utilising this data will help you understand if buying property in London in 2022 is the right tactic.
UK Property Market Insights from 2021
The price of the average UK home hit a record high of £267,091 in December, up more than £24,000 over the year, the biggest annual increase since 2003. This represents an average UK house price increase of 10.4% annually. Prices are now 16% higher than before the pandemic struck in early 2020.
As you can see from this table, Wales saw the highest growth with prices increasing 15.8% compared to the same time last year. Meanwhile, price increases in London slowed compared to last year, climbing just 4.2% to an average £507,230. This was a lower annual price growth than recorded in 2020.
Average Price Changes Across the UK in 2021
- Wales: Up 15.8% to £196,759
- Northern Ireland: Up 12.1% to £167,479
- South West: Up 11.5% to £294,845
- Outer South East: Up 11.3% to £329,869
- North West: Up 11.2% to £196,806
- Yorkshire and Humberside: Up 10.8% to £190,855
- East Anglia: Up 10.4% to £268,146
- East Midlands: Up 10.4% to £221,813
- Scotland: Up 10.1% to £172,605
- West Midlands: Up 9.4% to £227,031
- Outer metropolitan area of London: Up 8.8% to £410,992
- North: Up 7.7% to £148,105
- London: Up 4.2% to £507,230
(Source: https://www.bbc.com/news/business-59826341)
Some Highlights for the year:
- Factors that have helped fuel the homebuying boom include the government’s stamp duty holiday, which came to an end in England and Northern Ireland in September after finishing earlier in Scotland and Wales.
- historically low interest rates
- “race for space” sparked by the pandemic-fueled shift to remote and flexible working.
- Interest rates were raised for the first time in 3 years by the Bank of England to 0.25% from their historic lows of 0.1% as it tries to tackle rising inflation with prices increasing at the fastest pace in 10 years.
London Property Market Statistics
According to Plumplot which uses internet-wide analytics and data, the average price for the London region through the end of 2021, was £657K. This graph shows the comparison between the London region and England and Wales since 1995.
This next graph shows the breakdown of properties by price bands, based on number of transactions. The largest number of properties are priced between £500 – £750K with 23,000 transactions through Nov 2021.
These next 2 graphs are interesting to see side by side. It shows the pace of growth for the detached houses since 1995 far outstrips the other property types, showing insights into the needs of people looking for bigger properties with more space, particularly as people start to work from home more.
Affordability Ratio for Homes in the UK
Another key stat to watch out for is the affordability of property in London relative to earnings.
This graph and the associated chart show how much more expensive London is to afford compared to other areas. At 12.5 times price to earnings ratio, it means that a London resident with a middle income needs a 12.5x gross annual salary to buy a medium-priced property. The England and Wales ratio was 7.69. The timeline shows that up till about 2009, the regions were relatively on par with each other. After that London began to far outpace the other area but has started correcting ever since 2016 which aligns with the Brexit vote to leave the EU.
Things to Consider in 2022 when Investing in London Property
Inflation is now running at 5.1%, the highest in a decade, and Bank of England governor Andrew Bailey expects it to rise further this year with projections up to 6%.
In response and anticipation, lenders are already increasing rates. Further increases in the cost of borrowing would mean fewer people are able to gain a foothold on the property ladder and therefore this may weaken demand.
2022 will finally see the opening of the Crossrail system / Elizabeth line which will broaden the transport network. This could have a really positive impact and continued property price increases on those areas which will gain new stations or services. Make sure to check out my recent video on Crossrail and its impact on London housing.
London Property Market Property Price Forecasts for 2022
Forecasts range, but general consensus is that prime central London is expected to see price increases between 5 – 10% this year. In the rest of London, prices are expected to increase an average of 2%, well below the projected average for England of 3.5%.
London rent in 2021 rebounded and the average London rent in October 2021, according to Zoopla, was approximately £3,431 per month. This may attract a new way of investors to come into the London property market to try and take advantage while anticipating long term appreciation.
If you are looking to invest in London property, whether for your family home, an investment property, or a Pied a Terr, please get in touch to discover the best areas for your needs and budget.
Sources:
https://www.plumplot.co.uk/London-house-prices.html
