London Property Prices Expected To Rise In Longer Term

While the stamp duty holiday is driving activity right now, many people are concerned about the longer-term impact on the housing market. A recent study suggests the London market will continue to thrive and move forward.

While the stamp duty holiday is driving activity right now, many people are concerned about the longer-term impact on the housing market. A recent study suggests the London market will continue to thrive and move forward.

A new forecast, first published on the Homes & Property site, suggests London will witness an increase in property prices by 21% over the next five years.

The study by JLL also suggests that London will outperform the rest of the UK housing market in 2021. London is tipped to experience house prices remaining flat while there will be a national fall of 1.5%.

The study also expects many buyers to upsize to the suburbs, but first-time buyers will take the opportunity to step onto the property ladder in affordable regeneration zones.

JLL’s head of research, Nick Whitten, expects property prices in areas which were previously less fancied will also increase. This is partly down to home buyers prioritising home office space over the importance of location.

Nick said; “We are seeing buyers prepared to sacrifice commuting convenience in search of more space, which will drive activity in some previously less fancied locations.” Whitten also believes many homeowners will adjust where they live in London, but he doesn’t believe there will be a notable exodus from the capital.”

A shortage of homes will ensure prices continue to rise

Nick Whitten also spoke about the need for further homes being supplied in the market. One of the most pressing factors in the property market is demand outstripping supply. It is no surprise to learn housebuilders, like so many industries, have struggled this year. There has been a shortfall of homes being supplied to the market, and this means house prices are set to rise.

Whitten said; “We expected to see 20,000 new homes built this year against a target of 52,000. In reality this number has dropped to 10,000 for 2020 due to the industry shut-down and the ongoing need to socially distance on site.”

Prime London will lead the way

As is often the case, there are expectations that prime London property will lead the way when it comes to considerable deals when the market moves forward. It is then hoped that this initial burst will create a trickle-down effect which leads to further sales in the housing market.

Becky Fatemi is a property agent who specialises in prime property, and she said; “Prices have slid this year in prime central London by 20 to 30 per cent making these multi-million-pound trophy homes seem comparatively good value versus the equivalent districts in cities such as Paris, New York and Hong Kong. The residents of such homes spend money on retail, leisure, culture, transport and food, benefiting the wider economy.”

Will the stamp duty holiday be extended?

There are also concerns in the shorter term regarding the stamp duty holiday. There is now a backlog in deals taking place, and there are growing concerns some buyers will miss out on the savings. There have been calls from many industry experts to extend the stamp duty holiday. There have also been questions as to whether the stamp duty holiday was necessary.

Becky Fatemi spoke about the dangers associated with stopping the stamp duty holiday abruptly. She said; “The combination of the stamp duty holiday with Help to Buy is like giving a child too much sugar. If the Chancellor ends the stamp duty holiday abruptly, activity could crash.”

Property agent Alex Goldstein questions whether the Chancellor should have held off for longer, saying; “The pent-up demand and need for space in the lockdown was always going drive a mini boom in the housing market. He should have saved the stamp duty for when sales start to taper off, which is beginning to happen now.”

We know these are challenging times, but if you have any questions about the local property market, please feel free to contact us. At Ariston Property, we aim to support the local community as best we can, and we look forward to assisting you in any way.