Early 2022 Update

It’s been a busy start to the year – probably the busiest first quarter for IGL since starting over two years ago! As covid restrictions and isolations continue to ease (soon to be non-existent in the UK), there is a definite feel that the demand from foreign buyers is starting to return, with central London apartments still being great value in comparison to the height of the market in 2014 (although I believe this will change in 2022). Houses in outer areas with gardens are still the most in demand property now as the race for space continues. 

Demand

It might start sounding like a repetitive trend in these market updates, however the biggest challenge remains the lack of stock due to the level of demand. According to Zoopla (the property search portal) the number of buyers contacting agents about perspective properties has almost doubled the recent average. The real estate consultancy TwentiCi has stated that there were 36% fewer properties at the start of this year in comparison to 2020 in the UK. Moreover, it was the lowest amount of properties on the market since the consultancy started to collect data in 2008. 

Interestingly, the number of homes for sale in London has increased in the last two years. According to more research by TwentyCi, the number of flats on the market has increased by 20 percent, while the number of houses has dropped by around a third. This makes sense as the demand for houses during the pandemic has been very strong. However, I’m currently working with multiple clients who are looking for central London flats and I would argue that good apartments are almost as hard to come across as good houses.

While there are certainly more flats than houses available, there is a significant lack of stock for quality apartments. I believe there are two reasons for this – the first being that the owners of quality flats who don’t need to sell are choosing to wait until demand for flats starts to increase in order to get a better price. This could happen as soon as this year, especially if covid remains at bay. The second reason is that these owners are holding off selling due to the difficulty of finding a new home to move to after they sell.

Real estate prices 

Naturally, this lack of stock has had a significant effect on prices. Prices increased by 1.7% in February, while The Nationwide House Price Index increased at a yearly rate of 12.6%. The average UK home now costs around £30,000 more than it did a year ago. This is the highest yearly increase recorded by Nationwide. Central London locations are really starting to pick up as well – with annual asking prices up 10.6% in Kensington and Chelsea. This isn’t the case in every borough however, with Westminster dropping by 1.4%. 

Looking ahead 

I believe good central London flats will make a comeback this year, with the increase in both foreign and local demand. Employees will continue to return to offices, first time buyers will want to live closer to friends and work, and there will be a return of more overseas buyers and students. We’re already starting to see this – in November 2021, the numbers of offers accepted was 116% higher than the same period the year before. 

We will hopefully see the return of more quality homes come to the market. Knight Frank believes this will happen if the threat of omicron will continue to reduce. The more stock there is on the market the less of a prince increase there will be, however Knight Frank are still predicting a 4% increase in London home prices. 

When the stock of good quality homes is so low, working with a buying agent can ensure that you get access to the few good homes that come on the market. This was the case with a recent client of mine who were looking for an apartment. We were the first through the doors the day it launched, and we were able to outbid a cash offer that was higher than what we offered. 

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