London Property Market: 15 headlines you need to know today
Written by James Redington
Sales & Letting Director
Understanding the London property market can be tough, especially when there is a lot of hot air in the press at the moment. The reality on the ground can be very different.
These 15 headlines will help you understand what’s going on in the market today, and it won’t take you more than 5 minutes to skim the key headlines if you’re pushed for time.
Landlords
1 - £2,343 is the average London monthly rent.
London rents are rising fast, up 16.1% year on year. Extremely high demand combined with a shortage of available rental properties is responsible for the speed of growth. Over the last few years, landlords have had a tougher time in the market, so this rise may be giving some relief.
2 - Demand is up 20%, and stock is down 9% year on year.
The widening gap between supply and demand is not going to change. There is no quick fix, and I expect rents to continue to rise in 2023, as competition between tenants becomes even fiercer.
3 - Upward pressure on rents in 2023.
Renewal rates are as high as they have ever been. Renters want to stay put for longer, and it's also in the landlords’ best interest to re-new contracts. In my opinion this will keep the upward pressure on rents in 2023, as the shortage of supply is intensified even further.
Sellers
4 - New listings in October up 13%.
According to Rightmove, new listings in October 2022 are up 13% year on year. We’re still dealing with a lot of pent-up sellers that haven’t sold, and there is still a desire to come to market.
5 - Buyer demand is 4% higher.
Supply is still down, but demand is consistent. Buyer demand is 4% higher than the more “normal” market of 2019. This shows things are starting to go back to normal.
6 - Pick the best estate agent.
Speak to a qualified agent and take their advice on the best strategy to sell. You should understand what your agent is going to do for you, and how they are going to add value. Today is not a market for someone who is going to coast, so do your research and take advice from a top performing agent.
7 - Cash buyers make up 50% of the market.
Analysis from the Office of National Statistics & Land Registry reported that cash buyers make up 48% of the market in Kensington & Chelsea, an area popular with wealthy overseas investors. Overseas buyers are taking advantage of the substantial discount on property purchases, while the pound remains at an all-time low. We are also seeing a disproportionate amount of cash buyers in other areas as well.
Buyers
8 - Take advice from a mortgage broker.
With interest rates as they are, a variable mortgage product might be better. We’ve been obsessed with fixed rate products for years now, but historically variable rates did used to work out best. These products will become more popular going forward and as the mortgage market changes, you need the right advice on how the products work and how they compare to fixed rate options.
9 - Mortgage rates have started to stabilise.
Despite recent increases, 30-year mortgage rates are still below their historical average of nearly 8%. And it’s worth bearing in mind that average mortgage rates are just a benchmark. Buyers with good credit scores and strong finances often get rates below the industry average. On top of this, the banks are already lending at cheaper rates for longer fixed terms, which means the banks believe interest rates are going to come back down.
10 - It’s a competitive market.
A recent On the Market survey reported that 74% of buyers in the UK said they were confident they would purchase a property in the next 3 months. Over the past few years, many buyers pressed pause on their property search due to Brexit and Covid. The results of this recent survey show people feel more confident in the market, and they still want to buy.
11 - It’s still cheaper to buy than rent in London.
Waiting too long to buy might cost you even more than if you act now, especially if the current level of demand in the rental market maintains and prices continue to rise.
Tenants
12 - New builds are cheaper to run.
New builds are becoming more and more appealing to renters, who are looking for smaller homes with lower running costs, especially during the cost-of-living crisis.
13 - Competition to secure a property among tenants is at a record high.
To secure a property in today’s market, you need to make your offer as attractive as possible. Flexibility on move dates, less conditions, prepared to pay asking price and even offering significant funds upfront all help strengthen your offer.
14 - Lock in a longer contract.
This will give you some security in an ever-rising market.
15 - Don’t rule out property types you had previously not considered.
According to Zoopla, a new build property is 40% cheaper to heat than a 3-bedroom house. Be open minded when choosing your property. Give yourself the best chance of securing the best property that is suitable for you.
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Data Sources: Rightmove House Price Index November 2022, Rightmove Rental Price Tracker Q3 2022, Zoopla Rental Market Report Q3 2022, Zoopla House Price Index Report October 2022, Office of National Statistics, Land Registry, TheMortgageReports.com, On The Market Property Sentiment Index October 2022.