January Update
Is now the right time to buy?
2023 is set to be an interesting year for the London property market as the UK faces a cost-of-living challenge and higher interest rates. There’s a constant flow of relatively negative news regarding house prices, leaving a lot of potential house buyers wondering is now the right time to buy.
Despite the headlines, January has proven to be robust so far. According to research from Rightmove quoted in The Times, “the average price asked by new sellers has risen by 0.9 per cent… in January, the biggest increase at this time of year in three years”. Naturally, these are asking prices rather than sold prices and it’s still relatively early in the year, however it is still a stronger start than the market anticipated.
Even with a slight increase in asking prices, there is no doubt that we have gone from a strong seller’s market and into a buyer’s market. With the right advise, I would argue that it is much more advantageous to purchase a home in a buyer’s market because the competition isn’t as strong, and prices are calmer. Yes, there is the risk that prices might fall a few percentage points later in the year, but as discussed below the forecasts in years to come are positive.
It’s also important to note that it is impossible to call the bottom of a falling market or the top of a raising market. Rather than focusing on the perfect time to buy, I always advise my clients that it is best to have a long-term approach when buying a London property and focus the search on a best-in-class property. Owning a property in London for a significant amount of time has historically proven to be lucrative/safe, while buying a best-in-class property ensures your property will stand out from the crowd. My goal for every client is to find these types of properties.
Prime Central London (PCL) predictions
As it is the start of the year it may be a good time to have a refresh of the market predictions by a few key players.
Savills property predictions is that PCL will only drop only 2% this year. According to the agency, this drop will be short lived as prices begin to increase again in 2024. By 2027, they are predicting prime prices will be up 13.5%.
Knight Frank have a similar outlook for PCL for 2023, where they expect prices to drop by 3%. By 2027, they are predicting a 7.5% price growth.
While not bullet proof, the prime market is more sheltered from significant price drops in comparison to the rest of the market. According to a managing director at LonRes, “in 2022, sales of £5 million plus homes, which account for just 8% of the prime housing market, were 63% higher than their pre-pandemic average.”
There was an interesting article published in The Telegraph about the top 10 strongholds most resistant to price falls in the UK. In line with the forecasts above, the top 3 most resilient on the list were the most expensive boroughs in London – Kensington and Chelsea, Westminster and Camden. A buying agent was quoted in the article stating that Kensington and Chelsea is the most “recession proof”. This is because “mortgages account for only 7% of the total value of homes in the borough. Those that do have loans tend to be smaller levels of debt than people living in other areas”.
As resilient as these areas are it’s still a good buying opportunity now as there is less competition, however there is a bit of a Mexican standoff happening with buyers and sellers. Buyers are expecting large discounts, whereas sellers are trying to remain close to asking prices.
If you are looking for a London property, now could be a great opportunity to take advantage of a buyer’s market – please feel free to reach out for a free consultation here.