Key points –
- Unexpected Market Strength in Late Autumn: The London property market saw an unusual increase in strength during November, surpassing the activity typically seen in September. This shift is attributed to lower inflation rates and more attractive mortgage options.
- Rising Buyer Confidence: There has been a notable boost in buyer sentiment, leading to a revitalised property market in the late autumn months. Experts predict a potential market surge in spring 2024, assuming no general election occurs in the first half of the year.
- London Outperforms National Trends: London’s property market is outperforming the rest of the UK. This is due to less significant price increases during the pandemic, leading to a current state where prime central and outer London prices are significantly below their previous peaks, while the Nationwide UK index has risen since the pandemic.
- Stable Prices Despite Economic Uncertainty: Despite broader economic uncertainties, London has experienced only minor price declines. Sellers are cautious, which has helped stabilize prices in prime central and outer London areas.
- Potential Impact of 2024 General Election: The prospect of a general election in 2024, as anticipated under Rishi Sunak’s leadership, is seen as a potential disruptor to the property market’s recovery and growth. The timing and occurrence of this event remain crucial factors to watch.
It’s a peculiar but true tale in the world of property this year: November saw a stronger real estate market than September. Who would have thought? This unexpected upswing is partly due to inflation dipping below 5%, coupled with enticing mortgage offers — the best five-year fixed-rate mortgages are now under 4.5%.
Buyer Confidence Rises
According to Tom Bill from Knight Frank, buyer sentiment is on the rise, giving us a rather delayed yet lively autumn property market. If things keep going this way, we could see a significant market boost next spring. However, this is under the assumption that there won’t be any general elections in the first half of 2024.
House Prices: The Ups and Downs
The Nationwide has reported an increase in UK house prices for the third consecutive month in November. This trend aligns with data from Halifax. While property market numbers can be quite unpredictable, especially in a thin market, it seems we’re either at or very near the bottom of this recent downturn. Surprisingly, mortgage approvals in October exceeded expectations, hitting a three-month high.
London’s Prime Postcodes Feeling Jolly
As we approach the festive season, even London’s prime areas are feeling the cheer. There’s been more than a 5% increase in the number of offers made, compared to the five-year average, indicating a positive shift in buyer sentiment.
London vs The UK: A Tale of Two Markets
London’s property market is outshining the rest of the UK. This is mainly because, during the pandemic, property prices in London didn’t surge as much as they did elsewhere. For instance, average prices in prime central London (PCL) are currently 17% below their mid-2015 peak, while prices in prime outer London (POL) are down by 8% from their mid-2016 peak. In contrast, the Nationwide UK index is 19% higher than its pre-pandemic level in February 2020.
Buyer and Seller Trends
In London, the number of new prospective buyers in the three months leading to November was 7% higher than the five-year average. This is a stark contrast to the 10% decline seen across the UK. Additionally, London experienced a 5% increase in the number of property exchanges during this period, whereas there was a 16% decrease across the UK.
Stable Prices Despite Economic Uncertainty
Despite the economic uncertainties, price declines in London have been minimal. In PCL, prices fell by 1.8% in the year to November, and POL saw a 1.5% decline. Sellers seem to be holding back due to the uncertain economic climate.
Looking Ahead to 2024
As we look towards 2024, we expect both buyer and seller appetites to grow. However, a significant factor that could disrupt this trend is the calling of a general election by Rishi Sunak. The timing of this event remains a big question and could be a game-changer for the property market.
In summary, the London property market is showing signs of recovery, bucking trends and defying expectations. With buyer confidence on the up and house prices stabilising, the capital’s housing market could be heading towards a springtime resurgence. However, political developments remain a wildcard in this evolving story. Stay tuned!