London’s property market
The UK property market, and London in particular, has been chosen by international investors for several years as it represents a secure guarantee of high property returns. London’s popularity as a choice for buying a home is not only due to the speed of the purchasing process, but also to demographic and cultural factors that have stimulated growth in property sales in recent decades.
According to Jones Lang LaSalle (JLL), which publishes an annual report analysing the real estate sector in over 99 countries, the UK is the best country for real estate investment performance, sector quality, transaction transparency, effective regulation and ease of transaction processes. The UK ranks first in JLL’s Global Real Estate Transparency Index 2020 (GRETI) despite the uncertainty the market faced pre- and post-Brexit.
In this article, we will provide an overview of the UK and London markets to understand the trends of recent years and how the sector has reacted to Brexit.
An overview of fluctuations in the London property market prior to Brexit
From 2009 to 2015, the London property market performed better than the rest of the UK: the continuous influx of capital and investment into the British capital led to an increase in house and flat prices. The market has been growing for over 60 years and has seen increases of up to 274% in a single decade.
Global banks and financial services companies have always driven the property market and made London one of the most affordable cities in which to invest. Central areas of the city have attracted international investors from all over the world to prime locations such as Chelsea, Kensington, Belgravia and Mayfair.
Following the Brexit referendum in 2016, the London property market entered a period of great uncertainty, as the outcome of the UK’s exit from the European Union was still unknown. Between 2016 and 2018, this stalemate resulted in a decrease in the value of transactions within the market, leading to a significant drop in property sales of up to 9.5%.
What are the prospects for the property market in the UK post-Brexit?
The limited supply-demand imbalance and the decline in transactions between 2016 and 2019 did not cause a major crisis in the post-Brexit market. In fact, low mortgage interest rates and exchange rates were two factors that strongly influenced international investors: a favourable euro/pound exchange rate generates an increase in purchasing power, and access to lower mortgage rates has encouraged potential buyers to finalise new investments.
The relief measures introduced by the government to deal with the pandemic, such as the suspension of Stamp Duty Land Tax until March 2021, and the increase in property stock in 2020 led to a reduction in house prices for the first time in a decade. This market downturn has created an opportunity for investors to acquire properties in prime locations at prices up to 20% lower than in 2019.
Although property market forecasts may still fluctuate significantly, in the short term it is advantageous to take advantage of this market downturn to start new property investments. It is therefore essential to turn to property managers who follow market trends and are able to manage investments to generate positive cash flows despite the uncertainties.
London property market
At Welcome Home, we offer a comprehensive property investment management service tailored to your needs. We select the best properties for sale in London to invest in, handle all the legal and bureaucratic aspects necessary to finalise the purchase, renovate your property to get it ready for the market, and find vetted tenants to rent it to so you can start making your investment profitable.
