In 2020, estate agents and housing experts were not sure about what to expect from the real estate market in London, as well as the UK. Due to the uncertainty around the Covid-19 pandemic, the impact of Brexit and the economic turmoil in the country, no one knew the future of the real estate market.
In 2021, we have seen significant growth in the average price of houses, especially in London. As the months go by, the prices continue to rise. Will the price of houses in London continue to rise in the future? Will the London housing market crash? This is what the experts have to say.
Increased demand among foreign investors
Earlier, foreign investors and overseas buyers were unsure how the London housing market would respond to the Covid-19 pandemic. So, everyone watched with bated breaths as the house prices fell and then suddenly started to rise.
After the lockdowns, once the UK government allowed foreign investors to purchase property in London, the demand started growing. As more and more foreign investors showed interest in prime properties in London, the average price of houses started to rise.
Also, many foreign investors were making the most of the stamp duty holiday before the deadline. As the pound continues to remain a safe currency, it is expected that the demand from foreign investors will continue to rise, which will continue to boost the rising house prices in London.
Change in the priorities of buyers and homeowners
As more people started working from home, there was a drastic change in the priorities of homeowners and buyers. Individuals were looking to move into bigger homes with outdoor spaces.
Living in the city centre of London meant dishing out thousands and thousands of pounds for relatively small properties. So, homeowners and potential buyers started looking at properties in the outskirts and suburbs. Here, they could purchase spacious properties with private patios and balconies within their budget.
Due to these changing priorities, experts have noticed a slight decrease in the price of the property in prime locations along with a subsequent increase in the average price of the property in the suburbs and boroughs.
Reduction in London’s population
Many experts feel that the rising prices along with the change in buyer priority will lead to a reduction in the population of the capital. As more and more people will shift out to upcoming towns like North Kent, developing suburbs and nearby boroughs, the number of people living in Greater London will decrease drastically.
As the demand starts to fall while the supply remains relatively constant, the price of housing and rental properties will fall. Also, once the Covid-19 restrictions are lifted, and employees are called back into work again, it is expected that many young working individuals and professionals will start looking for a place to live in the city. In short, the prices might fall, but as soon as the demand rises, the prices will start to rise too.
New properties in the market
There has been a 40 per cent increase in the number of new properties coming into the market in London itself. So, as the demand continues to grow, the supply continues to grow as well. As long as the demand and supply go hand in hand, experts feel that the price growth will be slow but steady.
According to the experts, 2021 has seen the most transactions in the housing market – this includes an increase in the number of viewings, the sheer volume of property transactions, and the number of new buyers that are stepping into the housing market.
The last time the housing market witnessed such activity was in 2006 and 2007. Just ask estate agents Sittingbourne about the transaction average in the area. So, as long as the demand and supply continue to increase consistently, the price growth will remain flat.
Rising demand for rental properties
During the Covid-19 pandemic, many tenants moved out of their city centre rentals and shifted to neighbouring towns and cities. Also, many people lost their jobs and some faced wage cuts. Hence multiple tenants were unable to pay their rents on time which led to the reduction in the average rental price in the capital.
In 2020, the supply of rental property in the Capital increased drastically, while the demand was not very high. As London continues to open up and people start going to work again, the demand will begin to rise. So, despite the rising price of properties in London, experts feel that the rent will not rise at such a high rate.