Things To Expect From The London Housing Market This Summer

The housing market is still very active. Buyer inquiries are up 31%, and mortgage approvals and sales are up 12% and 11%, respectively, compared to the last ‘normal’ market in 2019. However, half as many residences are available for purchase, and inventory levels are down 55%. (Rightmove, HMRC, Bank of England). Prices are being supported by a long-term imbalance between demand and supply. The average time for a property to sell subject to contract is 31 days, the fastest time ever recorded. Rightmove reports that asking prices have reached their fourth consecutive record high in as many months, owing to the intense level of competition for properties.

In the first four months of 2022, over 433,000 properties in the UK changed hands, making it the third busiest start to a year since 2007. Due to Covid-19, last year was an extraordinary year, and 2016 saw a jump prior to the implementation of the 3% additional residences premium. April 2022, with the exception of last year, has been the busiest since 2007. (Dataloft, HMRC). In the last year, the London market has resurrected; it is believed that one in every 25 properties has changed hands. The most active housing markets in the capital are currently in Tower Hamlets, Havering, and Wandsworth.

The current scenario

Economic headwinds are intensifying. Consumer confidence has plunged to its lowest level since records began in 1974, as expectations for global and UK economic development have been lowered. Optimism is lower than it was during the global financial crisis, the Brexit vote, or the Covid-19 conference (GfK). A perfect storm has formed as a result of the Covid recovery, the war in Ukraine, rising energy and food costs, as well as a healthy labour market and low unemployment. Inflation is approaching a four-decade high. Many households are insulated from the impact of the latest base rate hike thanks to fixed-rate mortgages, but day-to-day finances are increasingly being squeezed. Experts, including Sittingbourne estate agents, opine that these had a considerable impact on the property market.

Slowly shifting gears

The issue for many is when, not if, the property market will begin to cool. Any gear shift, however, is likely to be slow and steady rather than an emergency brake, as was the case during the 2008 global financial crisis. The price increase is expected to be favourable throughout the year, according to forecasters. The fundamentals of the market are still solid. Many people still want to move, and there is a shortage of properties, which is exacerbated by figures showing that new home completions are still below pre-Covid levels, falling short of the government’s 300,000-home target.

To date, in 2022, the housing market has been mostly unaffected by the broader economic difficulties that dominate the news. The market is active, and many people are still looking to relocate. However, the question now is when, not if, the market will begin to settle down following the recent interest rate hike to 1%.

High-end market in London

Demand in the sector remains strong, with a study for Nationwide revealing that over 45 percent of residents in the region were either relocating or considering it. While new directions to the market have increased slightly, they have not kept up with consumer demand. According to Rightmove, there are twice as many purchasers as properties for sale in the market, with stock-to-purchase running low in all regions. In the first quarter, there were 8.4 percent fewer properties available to sell in Outer London and 4.9 percent less in Inner London compared to the previous year. While the region has more goods to sell than other locations, it is still less than the historical average (TwentyCi).

Prices are stable

Despite the broader economic issues, the paucity of houses to buy has resulted in fierce competition, which has kept prices stable for sellers in the market. More than half of houses are currently selling at or above their initial asking price, with SSTC properties selling at record speed. The average time to sell a home (SSTC) in London during March was 51 days, which is 13 days faster than a year before (Rightmove). Prices continue to rise month after month and year after year. In March, asking prices grew for only the second time in history across all regions and sectors of the market, while the rate of monthly price increases is moderating (Rightmove, UK HPI).

According to the most recent data from the UK House Price Index, yearly home price rise in London is 8.1 percent, significantly higher than a year ago (3.4 percent ). The annual growth rate in London’s prime marketplaces is increasing.

According to Zoopla, price inflation in England has pushed 3.5 million houses into the higher rate stamp duty category during the last two years. An extra 280,000 houses paid the 10% rate of tax on a purchase price of £925,000 or higher, while another 70,000 paid the 12 percent rate on properties priced more than £1.5 million.

 

 

 

 

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