Relocating to London has always been a popular move for homebuyers. So much so that the city’s house prices even outperform those of the UK's most idyllic beauty spots, including the very well to do parts of Surrey and Hertfordshire. And yet, since the coronavirus disrupted the property market back in March, we've seen a whole host of people accross the industry expressing fears about property prices in London starting to fall.
As lockdown began, we saw estate agents, Knight Frank, predict that prices in the capital would fall two per cent in 2020 if lockdown measures were to end during May (which we all know they didn’t). The company also speculated a three per cent fall in asking prices across the UK as a whole, based on the same criteria.
At present, lockdown has eased and strict quarantine measures have been put in place to contain the virus. However, it’s worth remembering that until these restrictions are lifted, we’re unlikely to see the virus’ full impact on the UK’s housing market, with the future of property in London remaining largely unknown.
With that being said, in the short term at least, the market, especially in London is performing remarkably well. UK house prices jumped up 0.2 per cent in June, as demand surpassed the levels of properties for sale, according to new data from Zoopla. Data that also found property sales in London to be up by a staggering 27 per cent! Why? Read on to find out…
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- What’s behind London’s sudden surge in house sales?
- What future events could affect the London property market?
- How much money do I need to move to London?
- Buying in London post lockdown: is it worth it?
In just two weeks housing sales in London have shot up 27 per cent. But it’s worth remembering that the condition of local property markets across the UK are dependent on a LOT of factors, particularly in the current climate. So, to give you a deeper understanding of what these factors are, here’s three to consider…
Stamp duty holiday
Let’s get the most obvious out of the way first. The government’s Stamp Duty Holiday is arguably one of the main reasons behind this property sales surge. The scheme enables buyers to save up to £15,000 when purchasing a home – the holiday lifts the Stamp Duty threshold from £125,000 to £500,000. A saving that’s motivated a lot of buyers and managed, for now, to keep the market buoyant. London’s notoriously high property prices have made the incentive particularly popular.
While the capital is a great place to live, for many Londoners, lockdown has provoked a dramatic shift in their lifestyle. Being hemmed inside for the good part of three months is no easy feat, especially when you’re living in a 1-bed flat with no balcony or garden. So as you’d expect many Londoners have decided to relocate to, or invest in new areas while the market remains reasonably stable. Couple this with rumours of a second Lockdown and you can see why so many have listed their houses for sale in the aftermath of the pandemic.
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Back at work
Another potential factor behind London’s ‘mini boom’ that many of us may have overlooked is that people are returning to work, now that lockdown measures have been loosened. With more people in the industry back at work (agents, solicitors etc.), sales that were on hold at the beginning of lockdown can now be pushed through for completion. For solicitors in particular, July will have been an incredibly busy month.
The coronavirus is expected to come with various knock on effects, capable of altering the trajectory of the market across both London and the UK as a whole. We believe the two biggest will be...
A second lockdown
If the UK, or indeed just London, is to face a second lockdown, the property market could go either way. We could see an increase in redundancies and repossessions, as more companies go out of business and leave residents forced to sell their property fast to neutralise remaining mortgage debts. Equally, we could also see new investors flock to the capital in search of second homes or buy-to-let investments, both from the UK and abroad.
Will there be a second lockdown? There’s talk of a second wave of coronavirus, so it could well be the case.
The Stamp Duty Holiday ends
As the Stamp Duty Holiday comes to an end (currently set for March 31st 2021), we think the market will see a slump in both supply and demand, as the amount of highly motivated parties decreases. By which time the majority of sellers wishing to flee the capital will have done so, thanks to this recent spurt of new buyers. Thus leaving any remaining buyers or sellers, far less motivated to do so and the market low on stock.
If London seems like the place for you and you’re eager to make the most of this Stamp Duty perk, then assessing the cost of the London lifestyle is essential. You can find just some of the associated costs below…
• You’ll need to be earning at least £40,000 to live comfortably.
• As of July 2020, the average house price is just over £605,000.
• Some of the cheapest areas to live are Barking (£300,000) and Bexley (£342,000).
• Pricy parts of the capital can see prices exceed £100 million!
• Monthly living costs for a single person in London (without rent) average out as £815, and £2,900 a family of four.
• Rent in the capital isn’t cheap! The borough with the cheapest rent that we found (Barking) has an average rent of just over £1300 per month – that’s over £300 a week. To put that into perspective for those of you overseas, out of the world's 524 cities, London is ranked the 44th most expensive to rent a property.
Ask us, and relocating to London could be a great way for you to make the most of the Stamp Duty Holiday. However, it’s not something you should rush.
Moving to a new city is hard enough in itself, let alone London - by far the UK's largest! As you’ve seen above, living in London comes with its costs. To live comfortably and get a mortgage you require a well-paid job, as well as being clued up on your finances. Which is why, if relocating to the capital would require you to find a new job or seek financial support, we’d strongly advise you don't do so just yet.
Even today, the full impact of the virus on the economy is still very much unclear, and we could many more companies make redundancies or shut down altogether – highly likely in the event of a second lockdown and not ideal if you've got large financial overheads. During Lockdown, the majority of companies have also suspended or fully scrapped their recruitment plans due to the virus, so it's not like getting another would be easy either.
Uncertainty that's been mirrored through property prices, which for the first time since 2012, have seen a year on year fall of 0.1 per cent, despite a 1.8 per cent climb in May. As a result, property prices this year are around 20 per cent below the same period in 2019. A downturn that's cost the economy around £27 billion!
Then again, we could be being overly cautious, and in fact taking advantage of the broad variety of properties available could be the best option for you and your circumstances. If so, it's worth noting that due to the high demands for property in the capital, a quick sale could be vital when looking to secure your onward purchase. This is where we may be able to help.
As a trusted cash buyer of property accross England and Northern Ireland, we buy your house within as little as 7 days, so not only do you not have to worry about finding a buyer, but also gain cash buyer status going forward - a valuable asset in negotiations! And if that's not enough, we'll cover your solictors and survey fees, among other exepneses.
Looking to relocate to London? Sell your house to us for CASH and minimise the fuss.