The Covid-19 pandemic has hit London harder than any other city in the UK. The well known London estate agent, Knight Frank UK, predicted that the London residential market would exceed the five-year average by some 5% in 2020. This was prior to the coronavirus pandemic of course.
Knight Frank estimated that there would be 1.26 million residential transactions in the capital compared with the 2019 number of 1.18 million. When the Covid-19 crisis hit they revised their estimates to 743,000 for 2020 which is a drop of 38% on 2019.
Lockdown Easing Boosts London Property Market Recovery
Another London agent, Benham and Reeves, held a roundtable webinar on 11 June 2020. They believed that the London property market was recovering strongly since the easing of the lockdown at the end of May 2020.
The webinar event comprised of industry experts who all concurred that there is increased demand for London property evidenced by a steady flow of transactions since lockdown easing. Rental demand is up as well.
The panel stated that they strongly believed the London rental market was “back on” as there has been a surge of tenants coming back into the market looking for agreements over two or three years. There is also evidence of property buyers getting back into the market as well with a number of sales transactions already happening.
A Positive Outlook for London and the UK
Knight Frank UK predict that property prices in the UK could rise by as much as 6% next year (2021). There is no chance of the Bank of England raising the interest rates from the existing 0.1% base rate which will help to ensure that demand in the private rental sector remains strong.
Only a month after the lockdown easing, Knight Frank UK saw record levels of transactions in London. The story was good for the rest of the UK too with property transactions smashing records. Figures of around 52% above the five-year average were recorded in June for the UK with London transactions 34% above the average.
It is fair to say that the property market in London and the rest of the UK has recovered faster than all of the experts predicted. This is excellent news for the property investment community. People are looking to move home for many different reasons right now. Most of them want to trade up.
London is unique
London is different to other UK cities because it is much more heavily influenced by events around the world. Knight Frank UK have see a lot of foreign interest in London properties particularly from Hong Kong. There have been several domestic buyers too.
There are unlikely to be much repossession in London or the rest of the UK thanks to the measures implemented by the government to keep everything afloat during the pandemic. Mortgages are now affordable now as well due to the low interest rates.
In fact, Knight Frank UK are so confident about the London property market that they predict that prices will sharply rise in 2021 with central London likely to see growth as high as 8%. The stock of properties available in London to buy or rent is low compared to demand. So if you like the idea of investing in London property this is a good time to do it.