The Housing Market of Central London Poised for a Resurgence
Property prices in central London are on an upward trend, with values expected to rise faster than in the outer boroughs. This shift comes after almost a decade of the outskirts of London monopolising the market due to their affordability, as reported by Evening Standard.
According to a study conducted by TwentyCi–a leading mortgage broker website–house sales in central London saw a reported 5.8% increase in the first quarter of the year, compared to 2019. In stark contrast, the number of homes transacted in outer London plunged by 9.1%. This drop in property demand has been attributed to hiking interest rates, inflated mortgage rates, and the risk of the cost-of-living crisis looming over the country.
In late 2019, central London reported a surge in demand for houses, known as the “Boris bounce.” Then, in a year, the COVID-19 pandemic shifted the focus towards properties in outer London as buyers sought more space. However, with the evolving market dynamics, a recovery in luxury central London property is now predicted.
Historic data demonstrates the change in dynamics in the capital’s property market. In 2021, the house prices in the ten most outer London boroughs were roughly 17.3% less than the city-wide average. This gap has since slimmed down to 9.7%, signalling a downshift in the once red-hot property markets in the outer edge and the east of London.
Conversely, in 2012, property values in the central and most exclusive regions were 130.5% higher than the London-wide average. After a period of sluggish growth, they now have reached 117.8%.
The affordability of properties in central London, coupled with the favourable exchange rate due to a fairly cheap pound, is likely to entice wealthy foreign investors to snap up more luxury properties.
The recent rise in the base rate in response to inflation staying stubbornly above 10% may lead to another round of increases in mortgage rates. The first buyers and second-steppers in the more affordable property market would be hard-pressed with this as they heavily rely on debt to buy properties.
On the other hand, the luxury core of the capital attracts a range of cash buyers who are less affected by the increase in mortgage and borrowing costs.
However, uncertainty remains as the spring-summer market approaches. Buyers are waiting to see if property prices drop in response to another round of interest hikes. In addition, the change in leadership and political uncertainties in the country have made overseas buyers cautious about returning to London’s property market.
That said, analysts unanimously mark the return of Middle Eastern buyers this summer as a significant “turning point” for London’s luxury property market.
As a result, property prices in prime central London (PCL) are expected to go up by 2.5% this year, but values in Greater London and the rest of the country are predicted to decrease by around 4% and 6% respectively.
With home sales increasing in PCL, the demand for real estate services such as Quintessentially Estates is expected to boom. A high-end real estate company ensures a client’s property gets maximum traction while helping them make the most profitable property deal.
Geeky News
Parallel House, 32 London Road
United Kingdom
COMTEX_436506189/2764/2023-07-06T17:19:06