In recent years, the property market in London has been experiencing trouble. According to data from real estate agency Knight Frank, these problems won’t ease anytime soon. Property prices in central London have declined by 1.1% in the first 2 months of this year, while average annual rental values fell by 1.5% in March. With these continued drops in London property being seen, the recent property slump in the capital is set to continue for the foreseeable future.
The fall in figures
House prices in prime areas are now 8% below their peak in August 2015, and prices are unlikely to increase in the coming months because of continued uneasiness surrounding the Brexit deal. In the rental market, average annual rental values for prime properties fell 1.5% in March, driven by a drop in supply. The number of new lettings listings fell 5% year-on-year in the 12 months to February.
However, there is still hope for the future of the rental market. Average rents increased 0.2% between February and March, the first monthly rise since September 2015.
Similarly, there is still demand for rental property in central London, as the city continues to attract businesses. This may place continued upward pressure on rents. The number of new people looking for rental property who registered in the first two months of 2018 was 16% higher than the previous 12-month period. The number of viewings rose 14% over the same period.
Yet, with more businesses moving to Europe following the Brexit referendum, it is unclear for how long this can be sustained.
Potential stabilisation in the future
Despite this downturn, there is still hope for the future of the London property market. In the mist of ongoing Brexit negotiations, the market seems to be stabilising despite this political uncertainty.
Speaking in its report, Knight Frank’s Head of London Residential Research, Tom Bill, comments: “While the market remains sensitive to political events there currently appears to be a sense of (relative) stability being restored. The impact of stamp duty has been substantially absorbed and is now an accepted cost of transacting.”
Trading volumes have also stabilised, with a 2% increase in the year to February 2018 compared to the previous 12-month period.
As it stands, the London property market is showing both promising and worrying signs. Whether the capital will continue in this slump or recover remains – for now – unclear.
About Samir Salya
Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.