Three things you need to know about the London property market in 2020
Whilst many predicted uncertainty around Brexit the reverse happened in the central London property market in 2019 so what will happen next year. Without a doubt, whilst there is a currency discount to London property for overseas buyers it will continue to attract buyers from all over the world. 75% of our buyers are from outside the Uk as I write.
Brexit and the election brought on by it may be an all-encompassing issue for the UK right now but clarity or a lack of a clear winner could have a significant effect going into 2020. Here are three things to consider if you’re planning to enter the London property market in 2020.
1: London rents are slowly rising
Data from 2016 show 18% of workers in the city of London’s Square mile were from the European Economic Area (EEA) at that time. Although the uncertainty surrounding Brexit has since caused many EU professionals to head back home – with a knock-on effect on the London lettings market – rents are now inching up, from -0.2% in September 2018 to 0.9% in September 2019. The main reason for the increase is that the capital’s housing supply is limited as less buy-to-let investors buy more stock and some have indeed sold, while the number of people coming to London to work, live or study continues to increase.
2: House prices and Brexit
When the much-publicised 31st October ‘no deal’ deadline passed safely thanks to a parliament-approved Brexit withdrawal deal, many property owners breathed a sigh of relief. However as arrangements for the transition period became known, the spectre of no deal raised its head once again and if trade talks fail, Britain may face a hard exit from the EU for a second time in December 2020. According to KMPG if no deal is avoided, average houses prices should stabilise and then begin to rise. If the UK is able to leave with a deal next year – avoiding a no-deal scenario at the end of 2020 – the pent-up energy in the housing market will be released and prices will rise accordingly. If a harder Brexit is actioned then if may stem the immediate uplift and leave prices as they are but that is good for buyers.
3: A 20.5% boom in prime central London property is predicted
According to Savills’ annual housing report, a luxury property in the heart of the capital is set to rise by 20.5 per cent over the next five years, beginning with a positive, three per cent rise next year (the first rise since 2014). It’s then predicted that exclusive locations such as Belgravia, Knightsbridge, Mayfair, Kensington and Chelsea, Marylebone and Notting Hill will see a rise of six per cent in 2021 then four per cent in 2022 and 2023 respectively. This will be followed by a modest two per cent rise in 2025.
Predictions for the ‘boom’ are based on a strong build-up of new buyer registrations. Most Central London Estate Agents would agree that potential buyers have been hesitant to commit their cash, as they are waiting for the current uncertainty to end, but lower prices, together with continued faith in the medium-to-long-term stability of the UK economy, are the key factors that experts believe will trigger a market recovery.
Prime London property has suffered as a result of increased Stamp Duty and Brexit uncertainty, but the report suggests that there may be a silver lining to the cloud that has lingered over London’s luxury property market since 2016. With overseas investors taking advantage of lower prices, it’s not all doom and gloom, and, depending on the result of the election, we may even see the Stamp Duty system overhauled in an attempt to kickstart property sales.
Whatever the direction of travel for the property market over the next 18 months, the indications are that this is a great time to invest, and award-winning London estate agents Hudsons Property is always happy to advise.
It will be those with cool heads, steady nerves and the ability to play a long game that stands to benefit most.