It’s nearly two years now since the world saw the first cases of Covid 19. And none of us could have predicted the disruption that the pandemic would have on us all. 2020 saw the UK property market effectively shut down during the first lockdown as businesses like us re-calibrated and had to find innovative ways to safely conduct our business. But since lockdown measures and travel restrictions have been slowly lifting since this summer, we’ve seen strong interest in London property sales returning from the peak of the pandemic.
The domestic homebuyer market has now corrected itself and returned to a more normal pace following a large burst of sales in Q1 and Q2 driven by the temporary Stamp Duty relief. And overseas, our international teams have been extremely busy with property events and launches almost every week in Singapore, Malaysia, China and Hong Kong where there is strong commitment from overseas buyers.
Overall, we’ve seen transactions up by 39% compared to 2020, with our Colindale branch based at the Beaufort Park property development, our best performer with new-homes and resale properties that are 3-10 years old. In a near second place the fringes of London were best performers where investors looked for value and yield, and found it.
Tube Zones 1 and 2 purchases have definitely picked up in the last quarter of the year. Our Singapore office has recently concluded a number of sales at White City Living, an outstanding Berkeley scheme next to Westfield London: Europe’s largest shopping mall. Our branch on-site at the scheme also reports a noticeable return of local workers and students in and around the development. The Silk District has also been popular with overseas investors as has a brand new scheme in Reading, situated near the coming Crossrail station, where we have sold 12 houses, mostly to Hong Kong investors.
Domestic homebuyers a driving force in 2021
Domestic buyers, prompted by the desire for a different type of property and lifestyle are a key factor at the moment and are keen to take advantage of the government’s 95% mortgage scheme. They have kept the property market steady in London. Interest rates remain low and even it they do hit 2% by the end of 2022, this will still make most mortgage loans manageable. So, we don’t expect this to have a significant effect on demand as there are other advantages to buying property right now. We’re also seeing an unusually high number of valuation requests from domestic sellers at the moment, dipping a toe in the market to see how much they could achieve for their property.
The impact of the Stamp Duty holiday
Of course, we cannot talk about the property market without discussing the effect of Rishi Sunak’s Stamp Duty holiday. Q3 saw a craze of sales transactions as buyers tried to get their property purchase through before the Stamp Duty deadline at the end of June. As a result, August saw a slowdown as the market corrected itself and started to settle down. But the tapered deadline (ending completely at the end of September) helped to minimise any serious market downturn. And because London hadn’t seen the same growth in property values as in other parts of the UK, the market has remained steadier and more stable.
Modern urban living with green space a priority
So we are continuing to see buyers enter the market, prompted by the high demand for housing generally. Most interest has been to buy in neighbourhoods where there is good open space and much of this has been on the outer fringes of central London. Places like Hampstead and Highgate have been in high demand as have Crouch End and Colindale where families can find convenient transport links, greenery and good schools.
There are plenty of reasons to buy now rather than wait – we’ve already mentioned low interest rates but the huge demand for rental properties also makes buying an attractive option for many now.
Booming rental market boosts buy-to-let investor interest
The rental market this year has been phenomenal and you can read our Rental Market Review of the Year which we just released for ground-level view of what is happening. In fact, we have never seen such high levels of enquiries from tenants!
This pent-up demand is in part due to professionals and international students who left London last year now looking to return to their careers and studies. This growing volume of renters (almost double the number we would expect in a ‘normal’ year) is leading to a massive shortage of rental properties. This is exacerbated by delays in new developments completing caused by lockdowns and shortages of building materials.
As a result, all our 18 lettings branches have waiting lists of tenants this year and many have at times completely let out all their rental property stock. This buoyant market is prompting investors to expand their buy-to-let portfolios as they can see the huge demand from renters in London. Earlier in the year, for example, we worked with one overseas buyer who bought 12 apartments in two schemes in the City and Nine Elms.
With many property pundits forecasting rent increases of 5-6% in prime London next year, this is an ideal time to consider renting out your property.
Of course, the key to succeeding in the rental market is achieving a good long-term growth and a decent rental yield and those who will need larger loans must calculate if their rental income will cover their outgoings, including taxes and maintenance on their property. You can find out how much you could earn from your property by using our handy rental yield calculator.
What are buyers looking for now?
There’s been much discussion about the impact of the pandemic on buyers’ long-term priorities. During the lockdowns, many Londoners chose to move out of the Capital in search of a larger home, with more space inside and out and perhaps a quieter pace of life. And working from home is likely to stay with us in the next few years, at least some of the time, affecting our decisions on where to live and giving us more flexibility. There’s no doubt that many of us wish to have a change of lifestyle while some are choosing to upgrade their properties as they spend more time at home now.
And as those who have remained employed have had little to spend their money on, with holidays off the agenda, they have more disposable income so those who are financially stable are now looking to spend on a move to a larger property for optimum home/work space.
Londoners return to the office
Equally, with many of us largely home-based for over 18 months, the appeal is now wearing thin and many businesses are encouraging workers to return to the office. Working professionals who moved out of London are missing the Capital and are ready to move back. You can see the difference in the City and other parts of central London. London’s restaurants, theatres and other attractions are buzzing again.
Life will still be different though and that is affecting what type of property and location homeowners wish to buy. Some may wish to avoid public transport and walk to work instead. They may want more outside space or a park nearby and more inside space will enable them to work from home when necessary. Some professionals may choose to have a pied-a-terre close to their place of work, to avoid a long commute during the week. And as workers return to the City and areas like Canary Wharf are springing back to life, demand for homes in East London is starting to pick up strongly now.
High demand in prime London suburbs
Another important trend we have been seeing this year is the growing demand for larger properties in London’s prime suburbs – Richmond, Wimbledon, Dulwich and as mentioned earlier, Hampstead and Highgate. Three and four bedroom homes in these areas have become scarce and our sales team has seen properties that are correctly priced, selling as soon as they come to market.
Overseas buyers return as travel restrictions lift
While travel restrictions were in force, understandably interest from overseas buyers was subdued. But as we have moved through 2021, we are now seeing the return of foreign investors to the residential property market. The easing of travel restrictions over the last few months has prompted many to expand their property portfolios and resume plans which many put on hold during the pandemic.
Enquiries to our sales team have been growing, with international buyers looking to expand their buy-to-let portfolios to take advantage of the booming rental market.
Equally, many overseas buyers invest in London property for their own personal use, either as a bolt-hole when they are spending time in London or perhaps for their adult children to use as a home when they are working or studying in London. Our international offices have seen a 21% increase collectively in Q4 for new-build homes and investors have been doing their homework! In 2019, it would have been hard to think that a Hong Kong investor would buy in Reading or Southall, but both areas have the coming Elizabeth Line (Crossrail) and we have been seeing brisk sales in these locations.
So the pandemic hasn’t diminished the UK’s reputation as an international hub for work, education and culture, and a language spoken world-wide. It has always been a safe haven for investors, perhaps even more so now, after resiliently coming through the dramatic events of the last two years.
Hong Kong buyers a real force in the London property market
Hong Kong BNO passport holders have also played a key role in the property market this year. Many decided to rent when they first arrived in the UK, as they got a feel for an area and decided whether it was right for them. But now, nearly a year after the first Hong Kongers arrived here, many are choosing to put down roots and make a real home.
Hong Kongers tend to prefer modern property developments which already have a strong Chinese community, such as Beaufort Park in Colindale, which is proving exceptionally popular, both with renters and buyers. While areas on the peripheries of London, such as Richmond, Kingston in Surrey, or Reading, are also quite popular, London does seem to be the main attraction. Those looking further out of London usually cite the extra family space they can afford, as a key consideration. We expect demand from Hong Kong BNO passport holders to grow further over the next year or two and our China Desk is well equipped to help with transactions on behalf of our growing database.
Contact us for a free market appraisal of your property
With continuing strong interest in London property, and a real reversal in trends now world doors are reopening and economies are growing again, we expect the New Year to bring a mini boom as and overseas investors will move quickly to expand their property portfolios. This growth in demand could bring an increase of around 5% in London property prices in 2022.
Get in touch for a free market appraisal of your property or if you are looking to buy or sell now, our valuations tend to be accurate and reliable. For London Sales contact us to discuss your requirements, or you can drop an email to us.
View all posts by Anita Mehra