Super-prime – that is how the London property market has been described. However, during the last few years of the pandemic and subsequent lockdowns, the real estate market in this hotspot saw a decline. The race for space to airier, greener and more spacious areas in the city suburbs and rural areas left the London housing market at a low. Nevertheless, that has changed now that normalcy has returned with the urban markets in and around London reopening and employees returning to offices. The scale at which the property market in the super-prime area of London has returned and risen is enormous. Estate agents all over, including the Sittingbourne letting agents, will agree with this.
Some of the reasons for this turnaround in the London property market are detailed below:
Need for space: The trend for more spacious accommodation, set during the pandemic, with people moving out of cities to larger areas, seems to have hit property requirements in London as well. Larger houses with 4+ bedrooms have become more popular, thus increasing the price for more spacious accommodation. Wealthy prospective buyers are looking to upgrade their homes. People are still looking for open spaces and greenery and those homes with more garden space saw the strongest annual price growth. filmefy
Smaller accommodation: Though many, mainly in the “top tier”, are looking for larger houses and more space, there has been a demand for smaller accommodation as well. Flats and apartments saw the highest quarterly growth in two years in the first quarter of 2022. This is due mainly to more people returning to work in offices and requiring accommodation close by. Also, the consequent job opportunities offered by various businesses reopening – such as shopping venues, restaurants, pubs and entertainment areas – have raised the demand for smaller apartments. Another plus point of accommodation with less space is that there are not as many responsibilities with having a smaller property in London as owning and taking care of a larger house (of the same value) in the country.
PCL (Prime Central London): Properties in this area are more in demand as buyers are now wanting to return to the traditional central London areas and neighbourhoods which were so popular in the past. With many of the available homes already sold, there is a shortage of accommodation. This, in turn, has led to an increase in prices in the area which has seen the highest quarterly price growth in the last 8 years. However, the prices are still less than the peak in 2014 so, for investors, there are still good buying opportunities. For professional investors, some of the neighbourhoods around the PCL area are also attractive since they have luxury homes with large garden spaces and proximity to schools.
Foreign investment: Although the domestic requirement is contributing a great deal to the London property market, foreign investors are also returning. Now that international travel restrictions have been lifted, overseas investors, who have always been drawn to the super-prime location of London, are showing an increased interest in property investment. The low GBP exchange rates are also an incentive for potential buyers overseas to take the opportunity to invest in property in the prime area. This has naturally resulted in a rise in property prices too.
Demand exceeding supply: This constant imbalance in the UK property market keeps the demand high against low supply, resulting in price increases. This reflects on the London property market as well. Despite the price increases, data has shown that year-on-year sales have increased in this area and there are fewer properties available – they are being sold almost as soon as they become available! Although inflation and the increase in living costs are making some people have second thoughts about investing in property, this process is quite often offset by the low housing stock on the market, thereby increasing the demand. Quoting from an authority in the market, “A supply/demand imbalance has produced gravity-defying UK house price growth.”
Rental market: The same imbalance in supply vs demand has caused a rise in rental values in prime central London. These increases seem enormous since rents hit a low during the pandemic when there was a vacuum during the lockdowns. The rental market in London is now recovering from its fall. However, as supply decreases, the demand increases. The dwindling supply is also due to some landlords taking advantage of the surge in property prices to sell and take their property off the rental platform. Holiday rentals such as Airbnb are recovering, reducing the supply of property for traditional rentals. Additionally, with the high student market, some wealthy overseas students have rented accommodation ahead of the terms starting. Also, tenants who were able to get discounted rates during the “low tide” opted for long-term contracts, ensuring that their rents would stay at the lower rates. This, in turn, has “locked” some properties for the periods of those contracts. According to another property authority, “On the lettings side, the market has been absolutely crazy and ridiculous. Everything has been flying off the shelves. And people will pay a premium for properties that are finished to a very high standard of quality – especially in the very high-end market.” https://spearswms.com/prime-central-london-property-increases/. This spike in the rental market is making some professional landlords have to rethink stepping back into the super-prime property market.
Conclusion: Despite inflation and the increase in the cost of living expenses, property investors – both domestic and overseas buyers – are looking at long-term ROI (return on investment). This seems to be ensured by going back to the super-prime property market. Despite increases in taxes and SDLT surcharges, interest in these property investments is mounting. There has, however, been a slow down on the part of some, due to reducing finances and confidence in buying, caused by global and domestic situations. However, for the more wealthy and elite buyers, these issues do not seem to be a hindrance. Hence, the future for the “higher-order” property market in London looks bright and all set to retain the limelight.thedocweb
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