The UK property market has remained resilient throughout 2021, despite the challenging year. The stamp duty holiday and “race for space” has caused a surge in buying and selling. And the London property market has also felt the effects of this.
Here we’ll dive into some of the factors impacting the UK and London property markets and what the predictions are moving forward. We’ll also include a few helpful tips for investors looking to buy a property soon.
Following the successive COVID-19 lockdowns, the UK economy is recovering better than expected. The economy is now forecast to expand by 7.25% this year, according to the Bank of England. This would be the strongest expansion since official records started back in 1949.
Extra government spending, like the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme, has limited job and financial losses. The unemployment rate is forecast to peak at 5.5% later in 2021. This is significantly lower than the 7.75% that was originally predicted for February this year.
The UK’s strong economic bounce-back, greater consumer confidence and successful vaccination program is expected to continue to have a positive impact on the property market moving forward.
Supply and demand
Buyer demand has also been strong across the UK property market. And the London market has seen this flurry of demand too. Property investors and homebuyers alike have been motivated by a range of factors, including the stamp duty holiday, pandemic-induced lifestyle changes and historically low interest rates.
According to recent data from Zoopla, one in 20 homes changed hands in the past year. Additionally, figures from Chestertons show a record number of properties sold in London during the first half of 2021.
With this high level of property transactions having completed in the past year, there has been a shortage of new properties coming to the market. This has led the supply of homes on the market to lag behind demand.
Housing stock levels are expected to remain lower throughout the rest of the year, but this will likely gradually recover in 2022. Demand in the hot market is also predicted to cool slightly in the coming months.
House price growth
Due to the supply and demand imbalance, house prices have been on the rise. Across the UK, the average home increased in value by 6% in the year to the end of July, according to Zoopla.
Figures from Chestertons also show house prices have increased in most higher-value locations across London. However, house price growth is expected to slow down slightly during the short term in most locations in the UK.
Chestertons also forecasts house prices in Greater London and Prime London to finish 2021 with 2% growth, while Prime Central London is expected to see a 3% total rise by the end of the year. In 2022, Prime Central London is predicted to lead the way with a 6% increase in average house prices. House price growth is then expected to remain steady across the capital in the years to come.
While house price growth is expected to slow down slightly in certain locations, long-term capital appreciation still looks positive in a number of growing areas of London. Areas seeing significant regeneration and investment are expected to fare the best in the coming years.
Tips for investors looking to buy soon
If you are looking to purchase a property soon, there are a number of ways to boost your chances of securing the perfect investment. Here are a few tips to help you in the current market.
Hire a mortgage broker
There are a growing number of mortgage deals available for buyers and investors. With the strong competition among lenders, there are products on offer with record-low interest rates.
However, mortgages are currently having a very short shelf life. Recent figures from Moneyfacts revealed deals are available for only an average of three weeks. This is giving buyers and investors a limited amount of time to secure a mortgage deal.
Because of this, it is particularly beneficial to seek professional advice. Mortgage brokers have up-to-date knowledge on the fast-moving market. Additionally, these professionals can help you assess the deals available on the market and specific lender criteria. This can help you figure out what the best deal is for your circumstances.
Additionally, as there is strong buyer demand, it can also be beneficial to apply for a mortgage agreement in principle prior to viewing properties. It can show you are a serious buyer, and it can even make the property buying process quicker.
Consider buying off-plan or a new build
With the short supply of housing, buying new-builds or off-plan properties can allow you to take advantage of homes that haven’t been built yet or have just been completed. With few new properties still coming to the market, this can help you gain access to more available homes.
The UK is also in a housing shortage across the board, so this may be the way to find what you’re looking for, particularly in certain locations. New-build properties also often come with a number of benefits like higher energy efficiency ratings and modern fixtures and fittings.
Book viewings with an experienced estate agent
It can be beneficial to book multiple viewings through an experienced estate agent. This can provide the opportunity to experience more professional viewings, which can be especially helpful when you’re looking at numerous properties.
At Chestertons, we have 200 years of expertise, knowledge and partnerships in the real estate industry. And we are providing free private car transport for clients who book property tours in London through us. This makes it easy for you to sit back and take in the properties you’re interested in.