Are House prices falling in London? How does this affect me?
This year has created many shifts in the market overall, but one of the most surprising has been its effect on the housing market in particular. At first glance, the housing sector looks like it is absolutely booming!
However, a different story begins to play out when you focus in on London and the surrounding areas.
In response to Covid-19, many expected an overall downward slump in the housing market. However, the opposite has proven to be true. In fact, this year’s summer boom boasted record sales which totalled nearly £37million! These numbers are especially high in Scotland, Wales, and the Midlands.
Right now, it is a seller’s market throughout most of the UK. There is high demand for houses and an unprecedented number of sales being pushed through.
Where, normally, there would have been a slight seasonal downward trend, many areas have seen a significant rise in the market instead. This means that the current environment is primed for those looking to sell their homes.
Stamp duty holiday
One of the biggest contributing factors to this market has been the freeze on Stamp Duty. Many buyers, particularly those who are previous homeowners, have found that purchasing a new home during this time has become increasingly appealing.
Learn more: Our thoughts on the Winter Plan
Where much of the country has seen increased demand in the market, this is less true for London and the Southeast. The exodus from urban areas and the likelihood of continued remote working has seen interest in city-living begin to dwindle.
Although prices in London are up 1.2% year-on-year, the mini-boom that other parts of the country are seeing don’t seem to have reached London or areas along its commuter belt.
This year has seen 69% more houses being put on the market, suggesting that the enthusiastic buyers in other areas are coming from the city. In fact, September has seen a surprising average monthly price drop.
A large part of the visible migration out of London has to do with changes to work and commuting. With remote working again being encouraged by the government, it seems that some of these changes will have longer term repercussions than initially expected.
As more workers find themselves no longer needing access to London transport and unable to enjoy the social side of city-life, many have started to look further afield for their living situations.
In addition to there being fewer overall commuters, comfort with public transportation is down and road usage has sky-rocketed. This adds both cost and time to commuting, which has some Londoners questioning the worth they see.
The areas around the commuter belt are also being heavily affected and these towns and suburbs are finding that they are in need of greater appeal than just proximity to the city.
How does this affect me?
Although the statistics about the housing market are readily available, it can be hard to see how the current market affects us as individuals. These changes can mean very different things depending on your situation.
If you are a homeowner in London, you may be wondering if it is time to jump ship or if you should hold fast. The reality is that, of course, it depends. Like any other financial matter, selling a home is a personal business and many different factors can come into play. With that in mind, it’s important to speak to an adviser before you make any firm decisions.
However, we can discuss a few general points.
First, take into consideration what your plans with the property were before this point. If it is your family home and you had no plans to change that, it may be better to continue with that line of thinking. Like the stock market, the housing market has ebbs and flows. It can sometimes be worth waiting to see what comes next.
If, on the other hand, you have an empty property, perhaps for buy-to-let purposes, this may be a time to explore whether or not this will continue to be viable for you. Without knowing the details of your situation, it can be difficult to say either way.
If you are a prospective buyer, there are other things that you may want to bring to the forefront of your thinking.
Firstly, what are your reasons for buying in London? As discussed, many residents are opting to leave the city in the wake of lockdown issues. Ensure that your reasons for buying somewhere in the city align both with your overall goals and your current needs and wants.
If buying in London is what you want, this may be a good time to look. With lower prices and more options, purchasing a home in the city could be a good move. Chances are that the market will begin to rise again eventually and this could be an opportunity to be a part of that.
If you’re thinking about taking the dive and buying a home, be sure to speak with an adviser about your options before making your purchase.
From what we can see right now, yes, the house prices in London are falling. This may feel scary for those who already own property in the city, but it’s important to remember that markets rise and fall, so this won’t be forever.
On the flip side, those who are looking to buy in the London area are probably feeling cautiously excited! If this is you, we suggest seeking advice as you start looking at the possibilities.