London has experienced a heavily disrupted 10-year property cycle. Prices in the capital capped out in July 2017 and have been declining slowly ever since. But healthy economic growth along with an insulated lettings sector suggest the market may not depress for much longer.
London property prices decreased for the sixth month in a row taking more than £15,600 off the value of the average home since the market peaked 18 months ago. Vendors are also holding back, hoping to achieve a higher price later in the year after political uncertainty has subsided. Despite this, the same report highlights a 5% increase in home-hunting, showing prospective buyer interest.
The market for first-time buyers is nonetheless relatively healthy– this could be an advantage for London buyer with an eye out for lower prices. Of course, Brexit is not the only factor at work here: lack of affordability, sharp increases in stamp duty and land tax, the possibility of a fresh general election, as well as Brexit-related job uncertainty all play a part.
London lettings are also affected, steered by similar factors.
While landlords may have wanted to offset the government’s tax regime by raising rents, uncertainty surrounding Brexit seems to have forced the vast majority to forfeit this to maintain a steady income. However, like the sales market, the limited supply has insulated the lettings market from more severe changes. This lack of supply has meant that, despite the political climate, rents are actually still increasing.
On the other hand, millennials are leaving London behind. Millennials relocating outside of London have fuelled rental growth in Manchester, Leeds, and Birmingham, with house prices in Birmingham rising twice as fast as the national average. Nevertheless, buoyed by healthy economic growth and the continued scarcity of new homes in the capital, the market is unlikely to depress much further. Indeed, spurred by younger buyers and renters, the market outside of London is already showing strength.
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