According to official data, London property prices are increasing at an unprecedented pace as buyers flood back into London’s market. The average home cost in London rose 8.1% in February to GBP529.882, a new record. Prices have not risen more quickly since August 2016. This means that London property prices have risen an average of more GBP55,000 per year since the beginning of the pandemic two-years ago. Prices have not risen more rapidly since August 2016. This means that London prices have risen by an average of more than GBP55,000 since the pandemic two years ago. In 2021, buyer inquiries increased by 36% while the number of properties available for sale fell by 11%. “If 2021 was defined as a race for space, people moving to the suburbs, 2022 has seen an absolute boomerang effect. House hunters are rushing back to the capital, a change in buyer behavior that has been accelerated due to the return of international travellers and office workers. “Marc von Grundherr is the director of London agents Benham & Reeves. He stated that while the London market continues its trail in annual appreciation rates, February’s explosive monthly rise is the first sign that the tide is turning. “We have seen a sharp increase in market activity on ground for some months, driven by both domestic professionals as well as foreign buyers. This is now beginning to translate into positive market momentum. Although the UK market is more susceptible to rising mortgage rates and increasing living costs, it is unlikely to affect buyers in the capital. As the year progresses, we expect to see a complete reversal in property value performance. “Lawrence Bowles is the Savills research Director. He stated that buyers are returning to pre-pandemic priorities, with living close to public transport and other amenities being a higher priority. Our February survey revealed that 40% of London’s buyers said that living near a train or underground station was their top priority when searching for their next home. 26% said they prioritized living close to amenities. “While London is in a great position for recovery, we expect that overall price growth will slow down as affordability tightens. In the last few months, the Bank of England already raised the base rate three more times. “Mortgage lenders have been pricing in additional rate increases, as inflation continues to run high. This makes it more difficult for first-time buyers with less equity to purchase. “Other agents agreed rapidly rising mortgage rates would soon snuff the mini-boom. North London agent Jeremy Leaf stated: “These numbers show that house prices continue to climb on an apparently inexorable upward trajectory, but that’s not exactly what’s actually happening on the ground right now. Although demand is still ahead of supply, concerns about rising costs of living, squeezed paychecks, and potential interest rate rises are reducing transaction numbers and price growth. “We expect activity to return more to pre-pandemic levels as supply increases as part of the normal spring bounce. Coreco’s managing director Andrew Montlake said that the property market has never been so disconnected from economic reality. Prices rising further in February should cause more anxiety than celebrations. The jobs market is strong, but the latest inflation data and slowing economic growth in February indicate that the bull run will soon end. Despite this, average property values will not fall much because mortgage rates are still very competitive, and supply levels are extremely low. “As it always does,” the supply-demand imbalance will continue to support average property values as we move forward, even though there is a potential economic storm.
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