August Newsletter
A cool down, not a crash
Despite the drastic headlines, the reality is that the London property market is experiencing a cool down, rather than a crash. Prices were down 0.6% in the 12 months to June – the predictions for this year were far worse than this so the market has proven to be resilient. There is no doubt that demand is down – according to Lonres, sales activity in July fell by 26% compared to the same period last year.
Although 2023 has been slow, the last few months have been stronger in comparison to the start of the year. In comparison to the 1st quarter of the year, sales of £1m plus properties in prime central London were up 9 percent according to CBRE. The £5 million plus segment has also performed well – between April and June there were 132 sales, in comparison to 108 from January to March.
Best in class properties are a rare commodity these days, as homeowners are choosing to hold off from selling in this slower market. When they do come on the market and are priced well, these properties sell very quickly. Working with a buying advisor to access these homes is key – many never hit the open market and if they do, a buying advisor will ensure you are first through the door and handle negotiations on your behalf to get the best possible deal.
Hong Kong Buyers
Hong Kong buyers have always been active in the London market, especially in the last three years. According to The Telegraph, “the number of Hong Kongers letting out property in Britain has doubled in just three years. Hong Kong residents and expats now make up 10pc of all foreign landlords compared with just 5pc in 2020, according to figures from Hamptons estate agents,”.
Rental Prices
The rental market is showing no signs of slowing down. According to the Office for National Statistics, rents increased by 5.5% in July, which is the highest monthly rate increase since they started collecting data in 2006. In a recent article, Bloomberg stated “tenants in the capital are now being asked to pay an average of £2,567 per month, up 13.7% from a year ago and by 28% from the same time in 2019 before the pandemic.”
This is due to a slow sales market because of the rising interest rates. Many potential buyers who would need to take out a mortgage are choosing to rent until mortgage rates come down – leading to a high demand and low stock of rental properties. There are predictions for rental prices to continue to increase. According to City Hall, average rents in London could increase to £2,700 next year from £2,567.