Recently, the London property market has picked up pace with a rise in demand from both buyers and tenants. What does this mean for the sector?
In the past few years, the London property market has been the most susceptible to fluctuations affected by the UK’s economic and political situation. With the uncertainty due to the COVID-19 pandemic, 2020 was a challenging year for the sector. However, the London property market picked up pace in 2021 with a particularly strong performance in March.
The stamp duty holiday extension and easing of lockdown restrictions has brought the London property market to life. Additionally, with more confidence returning to the sector, more buyers are viewing properties. And more sellers are putting their property onto the market.
Strong buyer demand
Data from estate and lettings agency Chestertons reveals there was a 57% rise in the number of people looking to buy in the capital from February to March. Additionally, there was a 39% increase in property viewings and 28% increase in offers made by buyers.
Across the UK, there has been a widening gap in supply and demand. However, in London, there has been a 40% rise in new properties coming onto the market. This is helping keep up with the strong buyer demand. Additionally, if this continues, house prices will likely remain stable.
Guy Gittins, CEO of Chestertons, comments: “Compared to previous years, the London property market has got off to an incredibly strong start in 2021 but it really accelerated and set new records in March. It is clear that people are now preparing for life after lockdown and having a suitable home is a top priority.
“To date, it has been the most active market we have seen since 2006 based on the volume of property transactions, conducted viewings and the number of buyers entering the market. Equally, we have seen a steady increase in properties coming to the market which, in the long run, will result in property prices staying pretty flat.”
How long are property transactions taking?
With the strong demand in the property market, this is causing property transactions to take longer than usual. This is being fuelled by many buyers hoping to beat the stamp duty holiday deadline. Professionals in the property industry, especially conveyancers, are feeling the pressure.
In Greater London, house sale transactions are taking an average of 108.25 days to complete over the past year, according to Property Solvers. The data included analysing more than 9,601 property sales between April 2020 and April 2021. And this research shows some areas are selling much quicker than this average.
The SE9, N4 and NW6 postcodes are the fastest areas, taking 80, 85 and 86 days to sell respectively. On the other hand, the SE12, RM12 and SM6 postcodes are the slowest. Property sales are taking an average of 129, 128 and 126 in those locations.
Ruban Selvanayagam, co-founder of Property Solvers, says: “Despite the broad level of inactivity under the first COVID-19 lockdown, the estate agency industry has recovered relatively quickly. Whilst buyer demand certainly hasn’t waned as many predicted, the time for house transactions to complete has certainly lengthened.”
“Many solicitors, mortgage brokers and other professionals in our sector have been working from home which has often resulted in further administrative and other operational delays. However, with restrictions gradually being lifted, and more people returning to office, the property buying and selling process should hopefully accelerate.”
Rising demand in the lettings sector
Last year, rent across the capital decreased significantly. This is predominantly down to some tenants facing financial difficulties and job uncertainty due to redundancy and furlough. Additionally, with the rise in remote working, some tenants looked to move out of the capital. This caused supply in the private rented sector to increase substantially last year.
Recently, the lettings sector in London has seen a strong rise in activity. Chestertons saw a 21% increase in tenants registering with their lettings department. There were also 38% more tenants moving into rental properties, and 12% more new rental properties came to the market.
With lockdown restrictions continuing to ease, demand for city centre properties is on the rise again. This will likely continue in the coming months as more offices and businesses open and more socialising is allowed.
Cory Askew, head of sales at Chestertons, concludes: “With people’s lifestyles changing almost overnight, larger properties with gardens outside of Central London have been the big winners from lockdown and although they remain in strong demand, we are starting to see buyers and tenants returning to more central parts of London in anticipation of returning to their offices in the summer.”