Over the last few months, the property market in the UK has been a little hostile to say the least. Interest in property has dipped and risen more frequently than a roller coaster as interest rates have peaked and dropped and peaked and dropped again. The cost of living crisis has also forced a lot of borrowers to put their mortgage and property purchase plans on hold until things start to look a bit brighter on the economic front. But one thing that has always been stable historically has been interest in prime London property. However, recent research and reports have shown that this too might be taking a bit of a hit in 2023.
Property Interest and Sales
As predicted, the housing market has pretty much completely followed the ups and downs of the UK economy as a whole. A general squeeze on expenses and rise in the cost of everything (including money borrowing) has undoubtedly had a negative impact on the housing market. There are a lot of conflicting reports about whether interest in property and property values are improving or not, but one thing that is certain is that they have definitely dwindled.
People are worse off financially than they were. People have less disposable income, people are struggling to pay debts that they already have, people are struggling to pay for food, clothes, utility bills and adding the extra debt of a mortgage has been the last thing on people’s minds. Because of this lack of interest in purchasing, sellers have also been forced to reduce the asking price of their property to try and coax buyers, driving down the average UK property price. This is of course a generalised impression of the UK as a whole, but up until recently, property in more popular areas such as prime London property has remained stable.
Why Is Prime London Property So Popular?
London is and has always been the primary hub of the country. As the capital city many global organisations have their head offices based in central London meaning that it has always attracted people working for these companies to come and live here. With more businesses being based in the capital, naturally more social and leisure activates such as bars, restaurants, museums, nightclubs have made the city a very desirable place to live. And getting your very own slice of the metropolis has become more and more sought after year by year.
it is no secret that buying any property in London will likely cost you much more that buying the same thing in the north of the country for example, and mega mansions and apartments based in central London can cost a lucky buyer multiple millions of pounds. For example, the current most expensive London property listed on Rightmove is a 5 bedroom apartment in the affluent area of Knightsbridge, which is currently on the market for £60,000,000. Of course this is an extreme example of prime London property, but if you are looking to purchase a property for £1 million, £2 million, £3 million or more, there are plenty of competitive large mortgage loan options in London that can be easily secured through Oportfolio mortgages.
Is The Prime London Property Market Still Strong?
There have been several reports lately that the London property market has started to feel the impact of the economic crisis, like the rest of the country has already felt. Mortgage and property news website The Intermediary has reported that prices and activity in the central London property market has reduced significantly lately. This includes property price, sales activity and also rental growth rate.
Citing independent property analysts LonRes, The Intermediary claims that achieved London property prices had dropped by 4.9% in a year, the largest drop in property prices achieved since 2019. They go on to say that according to LonRes’s research, sales activity in the prime London market also declined by 21.9% meaning that fewer people are showing interest in prime property in the capital than they were previously.
The reason for this must be due to economic pressures of the country. Whether that is buyers feeling like purchasing an expensive property is not the right move at the moment, or even potential buyers feeling uncomfortable with investing in property in the country while the economy struggles. Favouring purchasing elsewhere.
London Rental Property Market
Finally data on rental properties in the capital is also explored. LonRes’s data shows that rental growth in the capital apparently slowed to 7.3%, the slowest rate of growth since September 2021. This is mainly due to rising mortgage interest rates and the rising cost of utility bills cutting into London landlord’s profits much more than they did before. But, despite this, tenant competition and demand for rental property is very high still. This is exacerbated by a lack of rental stock.
Today the Daily Mail reported that there are now more than 100 tenants a month registering at every lettings agency branch, ten times more than the number of homes available to rent. What does this mean for potential London landlords and current buy-to-let owners? Despite a general shrink in rental income growth, the demand for prime rental property in London is still very high and if you have the opportunity to purchase, this is still a good investment opportunity. By to let mortgage rates, like all mortgage rates, are coming down and will likely decrease even more over the next few months and years.
Speak To a London Mortgage Advisor
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