Key points –
- Prime central London’s housing market is experiencing a resurgence, marked by a significant increase in buyer interest and accepted offers.
- The stabilisation of interest rates has boosted buyer and seller confidence, contributing to the market’s recovery.
- Economic pressures like inflation may still exert downward pressure on house prices, with the luxury sector remaining below its 2014 peak.
Prime central London’s housing market, an area that has faced its share of struggles, is now witnessing a significant upswing. This resurgence is a breath of fresh air following the turmoil caused by the 2022 mini-Budget, which had far-reaching impacts across the UK’s housing sector.
A Surge in Buyer Interest and Offers
Estate agent Strutt & Parker has reported an increase in activity in prime central London, which includes prestigious areas like Chelsea, Knightsbridge, and Kensington. In November, there was a 16.4% rise in the number of applicants looking to buy homes compared to the same month last year. This followed similarly high levels of interest in October. Additionally, the number of offers accepted on properties last month saw a 25% year-on-year increase, and the number of offers received surged by a staggering 44.2%.
The Role of Mortgage Rates and Buyer Confidence
A key factor contributing to this revival appears to be the stabilisation of interest rates. After a period of hikes, there’s been a pause, which has helped bolster both buyer and seller confidence. The mortgage landscape is showing signs of improvement, with Nationwide reporting that UK house prices have risen for three consecutive months as of November.
Kim Kinnaird, director at Halifax Mortgages, highlights the slight uptick in mortgage approvals, attributing it to an improving picture for homebuyer affordability. With mortgage rates beginning to ease, buyers are seemingly more confident and inclined to proceed with their home purchases.
Caution Amidst Economic Pressures
However, Kinnaird also warns that ongoing economic pressures, such as inflation and the broader cost of living crisis, are likely to exert downward pressure on house prices into the next year.
The Luxury Sector: A Special Case
James Gow, head of London sales at Strutt & Parker, points out that the luxury housing market in prime central London remains below its peak levels of 2014. Despite this, committed buyers recognise the value this market still offers. This segment is less influenced by borrowing rates and more by sentiment and confidence, making it a unique part of the housing market.
Conclusion
In summary, prime central London’s housing market is showing strong signs of recovery, fueled by stabilising interest rates and growing buyer confidence. However, economic challenges remain, and their impact on future market trends will be critical to watch.