London Third Quarter Property Market Update
The average price for a property in London in July 2021 was £494,673, according to the latest index by the Office for National Statistics (ONS).
This was a 2% decline from the £504,672 average in June 2021 – the final month for home buyers in England and Northern Ireland to take full advantage of the stamp duty holiday. Speaking of the stamp duty holiday, that fully ended on 30 September.
The £494K average price is however a 2.2% increase from the July 2020 amount as seen in this graph which shows the breakdown by property type.
According to the ONS data, London’s average house prices remain the most expensive of any region in the UK. However, the capital also continues to be the region with the lowest annual growth.
The annual change in prices in the three months through September was just 4.2% in the capital, less than a third of the growth seen in Northern Ireland and Wales, according to Nationwide Building Society. The U.K. average was 10.3%.
This won’t be a surprise to many who follow the property market as it continues a trend since the pandemic hit with buyers seeking more space and recognising they will be able to work from home more often.
This graph shows that the 4.2% annual price change for London is a decline from a 7.3% price change from the 2nd quarter.
Now let’s dig into the high end of the market, talking about properties £2M+
This market has been the hardest hit since the end of when changes to stamp duty tax dramatically increased the cost of buying a high-value property. Then we had Brexit which added to the sense of caution among wealthy buyers, many of whom are overseas buyers as they felt unsure as to their status and ease of access into the country. All of this lead to prices in prime central London to fall by nearly 20% between 2014 and 2018.
This graph shows the trajectory of high-value transactions since 2005. You can see the steep growth from 2005 till about 2008 with the global financial crisis that plummeted housing values. But also the steady rebound until 2014 with the introduction of the higher bands of stamp duty and, compounded with Brexit uncertainty. Then we had the bounce with the last general election in Dec 2019 which confirmed Brexit, only to be met with Cove starting in about March 2020 and the series of national lockdowns that followed. So the London property market, especially at the high end is long overdue for a steady rebound.
Forecast
Looking forward, London is set to underperform the rest of the country until 2024 according to the Property Industry Eye. They forecast prices in the capital to end 2021 up 1.5% and then rise by 1.0% in 2022, 1.5% in 2023, before accelerating to 3% in 2024.
For buyers, this may mean you’ll see more competition for good properties than you’ve seen in 5 years. For sellers, it will be encouraging to know that your home, if priced right, should see strong demand and possibly multiple offers.
I hope you found this video useful, and if you would like support selling or buying a property in London, please do get in touch.
