“London property prices surged by 7.4 per cent at the start of this year, the fastest annual rate of growth since 2016” according to figures from Nationwide.
They cite a lack of supply and sellers favouring cash buyers who aren’t in “chains”.
Latest London property price figures come as a surprise to economists
Of course, this has come as a massive surprise to economists who only two years ago were forecasting a 16% fall in property prices. Their explanation now is that these gains are seen as a temporary bounce back from the pandemic.
As ever, they are looking in the wrong direction, because they are saying that the excess savings/pent-up demand will be exhausted soon. But if that is the case, then how do they explain this?
“There is a record £1.9tn on deposit in the UK” (Source – Financial Times)
The article goes on to note that this has happened while “deposit rates are at a record low. Keep your money in cash and with UK CPI at 7 per cent you are guaranteed to see its purchasing power fall by over 6 per cent a year.”
Hmmm, would it be unfair to suggest that there is still considerable room for London property price increases and this is before one even takes into consideration the continued relaxation of lending regulations coupled with the growing influx of international buyers which is still below the average?
Speaking of averages, the general figures you read in the press hide much larger increases (and indeed decreases), so do you know which areas in London and types of properties in those areas are likely to outperform in the next few years?
If not, how do you expect to make a good decision?
“Arguably the most impressive part of the entire service was that Jeremy advised us to buy a property that was 30% under our maximum budget.”
Mr Z Sidek (South Kensington)
Most people approach buying a property in London in a way that almost guarantees that they will not acquire the best property their money can buy (and that’s before they make various negotiating mistakes, so they don’t buy at the lowest price possible either).
Frequently Asked Questions: London Property Prices
Are property prices in London falling?
At the time of writing, prices in London are increasing for many properties. However, the question is far too general. You have to understand what is happening to prices for the type of property you wish to acquire in your target area and price range. Unfortunately, most of what you will read in the press is far to general to be of any use. Indeed, talk of the London property market is very misleading as there are dozens and dozens of markets within London. As a brief example, houses in Notting Hill with direct access to communal gardens have dramatically outperformed flats in the same area.
Will London house prices fall in 2023?
The press is full of reports about the dangers for the property market ranging from high inflation and rising interest rates to the cost of living and high prices compared to income levels. Unfortunately, the experts quoted in the press (whom the majority listen to and believe) have a woeful track record when it comes to predictions. For example, the Bank of England forecasted in 2020 that prices would fall 16% due to the pandemic. They are up c. 14%!
But no-one ever questions why the so called “experts” make such woefully bad predictions on such a regular basis. However, there are much bigger drivers that affect London property prices which they ignore. This is information I use to help our clients make astute decisions and avoid the mistakes that those who rely on the advice in the press make.
For example, focusing on the price to earnings ratio makes little sense in prime central London because it is a truly international market, so why would you gauge it against UK income instead of looking at global wealth (not to mention GBP weakness against certain key currencies)? This is just one example.
Is it a good time to buy in London?
This is a question I am asked a lot but it would be incredibly dangerous to give you an answer here without knowing what type of property you wish to acquire, your budget, what your goals are and much more information. Unfortunately, there are lots of headlines in the press telling you what to do, but how can anyone give advice without fully understanding your specific situation and needs?
So, if you would like a sensible answer to this question, would it be a bad idea to discuss your plans in more detail? If you would like to do so, contact us using the details below.
Contact Mercury Homesearch
If you would like to avoid making the same mistakes as those mentioned in this article, simply call 02034578855 (+442034578855 from outside the UK) or email jeremy@mercuryhomesearch.com.
Topics | London property prices ; London real estate prices
