There was hope that the new year would bring a fresh impetus to prospective buyers, there was light at the end of the tunnel with the pandemic and the stamp duty holidays were becoming a distant memory. Thankfully, this has proved the case and we have seen a steady increase in new buyer registrations, new offers and properties going under offer since the turn of the year. The horrific scenes being witnessed in Ukraine, along with the severe geopolitical tensions and soaring inflation are a real worry and there is a real chance they could affect the London Property market. However, we have not witnessed any changes in buyer behaviour as yet, and the other key drivers for the market are positive. Mortgage rates are still very low, and it’s not surprising that owner occupiers are driving the increase in lead numbers. They face a backdrop of high rents and low property availability, meaning reduced choice and the route of home ownership looks increasingly inviting.
Below I’ve listed a few of the other key issues that we feel may play a big role in our local market for the rest of the year.
Higher rents – the lack of rental property due to a mass return to London after the pandemic exodus, has meant that rents have increased quickly. This has meant that the difference between the monthly rental for a property and the monthly mortgage payments for a similar one has become greater and the saving in monthly outgoings makes it more and more attractive for tenants to become home owners.
Lower mortgage rates – mortgage rates are still at historic lows despite the recent rate rises, and there are some very attractive rates for long term deals.
Potential for greater affordability – the Bank of England is currently considering removing some of the stress tests that were put in place after the global financial crisis. Should this happen it could lead to an increase in buyer affordability.
Better returns for investors – with rents at an all time high and tenant demand at extreme levels, many new investors are entering the BTL market.
Cladding – the cladding saga continues to roll on and whilst there appears to be progress it’s very slow and anyone with a property that they would like to sell that has combustible cladding or an unsatisfactory ESW1, still needs remedial work before they can do so. This is holding back a large amount of stock from the market and leading to short term increased supply in developments when works are complete.
Increased (and increasing) service charges – I have been selling property in London for almost 20 years and of course, a lot has changed over that period. In that time service charges have gone from something that wasn’t on a buyers list of questions, to one of the first things they ask about. Buildings that have a higher service charge than average or have a chequered past with high percentage increases are becoming more and more difficult to sell
Jaimie Beers – Managing Director