London’s housing market is showing signs of stabilizing, with experts cautiously optimistic about the city’s future property prospects. Although the market still faces challenges and uncertainties, such as the COVID-19 pandemic and Brexit-related issues, there are also positive signs of recovery and growth.
One area of concern is the affordability of property in London, with first-time buyers feeling the pressure of rising house prices. According to recent data from Rightmove, the average cost of a mortgage for a first-time buyer in London has increased by £363 since last year. This highlights the need for solutions that can make home ownership more accessible to younger generations, such as shared ownership schemes and government incentives.
This month, the average asking price of a property for first-time buyers in the City has reached new heights, with a record high cost of £498,281, which is significantly higher than the average of £224,963 across the rest of the UK.
According to Zoopla, as the desire of Londoners to become homeowners increases, households now need an additional £12,000 in income to afford their own property. The average household income required to purchase a two-bedroom home in London has risen to £97,000, compared to £91,000 in 2020, while for a three-bedroom home, it has risen to £115,000 from £103,000 almost three years ago.
In an interview with City A.M, Knight Frank’s Head of UK Residential Research, Tom Bill, discussed the potential for rising costs and demand to drive up property prices in traditionally more affordable regions of London such as East and Southeast. He predicts that buyers may turn towards more affordable parts of London and also move out of the city to regional cities in order to get more value for their money. This trend gained popularity during the pandemic as people sought out a better quality of life in the countryside. However, with the continuing rise in living costs, it could also be a trend that the market will observe this year. According to Rightmove, the average property price in Reading is £449,731, which is 14% cheaper than London’s average of £725,715.
Average prices by borough
London’s property market, with 3.7 million households, exhibits significant disparities in average sold prices and their fluctuations across the city’s 33 local authorities. The most recent information from Hamptons illustrates how various regions shifted in the rankings due to their house prices rising, falling, or remaining unchanged throughout 2022.
Kensington & Chelsea and the City of Westminster, the two priciest boroughs in London, have maintained their positions at the top of the rankings, despite both experiencing a year-on-year drop in price growth of -9% and -8%, respectively. These declines were the steepest in the capital, bringing the average prices in these areas to £1,303,740 and £936,940, respectively. The City of London had the largest increase in house prices, rising by 18%, making it the third most expensive borough, surpassing Camden. Richmond’s 2% rise pushed Hammersmith & Fulham out of the top five, as the suburban area saw a post-Covid demand for space.
London’s High-End Property Market Worth £10m+ Reaches Pre-Brexit Levels
London’s high-end real estate market for homes worth £10 million or more has regained the strength it had prior to the Brexit referendum, with over 160 luxury properties sold over the past year, for a total of £3.1 billion.
Knight Frank and LonRes have analyzed Land Registry data and found that in the year leading up to March, there were a total of 161 sales of properties worth £10m or more in London, which equates to an average of three sales per week.
According to Paddy Dring, the global head of prime sales at Knight Frank, London continues to be highly esteemed by global buyers despite recent events.
Kensington witnessed the greatest number of sales valued at £10m or more (26), with Belgravia coming in second (25) and Mayfair in third place (22).
In conclusion, London’s housing market is showing signs of stability and growth despite ongoing challenges, such as the COVID-19 pandemic and Brexit. While the high-end property market has regained strength, the affordability of housing for first-time buyers remains a concern, with rising house prices putting pressure on younger generations.