There’s a sense of optimism in the London property market right now, with demand from buyers strong, despite uncertainty caused by interest rate rises and the increasing cost of living. Yet confidence remains high and these issues don’t seem to be detracting from the desire to buy a property in London.
Enquiry levels at our London estate agents’ branches are increasing at a rapid pace which is in turn leading to more viewings, more offers and so more transactions being concluded. And thankfully, we are now receiving more new instructions which is helping to rebalance the equilibrium between supply and demand. Although we always need more new instructions as enquiries gather pace.
Some of this increased activity is the consequence of our return to ‘normal’ and our desire to create a new lifestyle for ourselves following two years of pandemic restrictions. What we want from our homes has changed and continues to evolve. Equally, rising interest rates mean buyers are keen to lock into fixed rate mortgage deals now, before they are withdrawn and rates increase.
So the market is busy but it feels a lot more stable now than it did in the first half of 2021 when many people were still nervous after recurrent lockdowns and continuing travel restrictions.
The leap in confidence is tangible. And this has filtered through to an increase in sales. The summer months are always our busiest, particularly June and July, and we’re seeing many sellers looking to put their homes on the market to take advantage of this buoyant summer season.
As the number of potential buyers registering with us continues to increase, we are always looking for new instructions. Please get in touch with your nearest Benham and Reeves branch if you’d like to discuss selling your property.
We’re seeing a noticeable increase in the number of international clients we’re working with at the moment. We’re carrying out more property tours with clients visiting the UK in person – some returning after nearly three years away. Recently we’ve been working with buyers from India, Malaysia and Hong Kong and they’re keen to resume property tours in person again. Budgets vary enormously, ranging from £500k for a buy-to-let investor looking to add a new flat to their portfolio, to £10m for one High Net Worth individual looking for a stunning London home as their main residence.
Buy-to-let investors looking to maximise rental yields are continuing to expand their portfolios by buying in smart, new developments in previously overlooked areas. We’ve been carrying out viewings with a number of overseas clients who are rebalancing their portfolios, often now choosing to buy in Zone 4, either to the west or east of central London, where prices are lower and so higher rental yields can be achieved.
Popular developments include The Horlicks Quarter in Slough, The Green Quarter in Southall and Hayes Village. These developments are extremely popular with renters, so flats here let quickly, with virtually no voids, achieving excellent rental yields of typically up to 4%. Other West London residential developments attracting a lot of interest from investors include Western Circus in Acton and Watkin Road in Wembley. In East London, Upton Gardens in East Ham is also very popular.
The recent launch of the Elizabeth Line (Crossrail) has been transforming many areas of London, as we’ve recently reported. Read more at: Millions in London are feeling the “Crossrail Effect” (benhams.com)
And the new rail line has created a further buzz amongst buyers keen to tap into strong rental demand now that journey times have been slashed along its path. Royal Arsenal Riverside in Woolwich is a prime example – a real hotspot for both buyers and renters. We’ve been seeing growing demand here from both homeowners and buy-to-let investors.
While enquiry levels continue to increase and there is certainly no shortage of buyers, there is still a severe lack of stock in London, despite recent completions now taking place after a couple of years of delays in some cases.
This lack of stock means that the gap between asking prices and sold prices is narrowing. In London, the gap between the average sold price (£524,570) and the average asking price (£653,333) fell to just -19.7% during the first quarter of 2022, according to recent research we’ve carried out. This is the smallest gap between seller expectations and buyer intent, bar one, since we first started carrying out this type of research in 2018.
Read our research in detail: Stock shortage sees asking to sold price gap close to record low (benhams.com)
So this suggests that while sellers will tend to overprice their property a little when they put it on the market, in order to leave room for negotiation, buyers are prepared to pay a little more to secure their chosen property in this busy market. Good news for sellers!
Meanwhile, our latest property market analysis reveals that the prime London property market, that is properties valued from £2m – £10m, bounced back in Q2, with homebuyer demand rising by 1% in the second quarter of the year (reversing a decline in Q1) but also up 1% on an annual basis.
Many overseas investors may not be up to speed with how dramatically the London skyline has changed over the last few years. New areas of regeneration, those close to Crossrail stations as well as other areas, are now in very high demand by London’s professionals so make ideal locations for those building a property portfolio seeking both rental income and potential capital growth.
So one of our key roles is to help clients assess the overall picture when they are planning their next property purchase in London. Some have specific areas and types of property in mind while others welcome specialist advice on areas that meet their investment criteria.
If you are planning a buying trip to London over the next few months, please get in touch with our team of estate agents and advisers who can plan a property search with you to make sure you get the most out of your trip.
This is one of the busiest times of year for London property sales and we are still very short of new instructions, so contact our sales team to arrange a free market appraisal of your property.
View all posts by Philip Lingard