2020 was certainly an interesting year. We had the pandemic, national lockdowns, restrictions on property viewings, low interest rates, a stamp duty holiday and the end of Brexit. A year to remember, but for many of the wrong reasons. So, against this background, we would like to explain how this has impacted the property market in London for both the home buying and rental sectors.
House prices rising in London and the UK
We’ll start with some good news for current homeowners or landlords. House transaction prices have risen in the capital and across the UK and they’re averaging £496,000 in London.
So it’s interesting to see this year’s increase, although progress hasn’t been smooth. The first national lockdown saw a sharp fall in buyer and seller sentiment. But, since then confidence has risen and so has demand.
In fact, demand has risen faster than we anticipated, which was certainly a result of the Chancellor’s announcement of a Stamp Duty holiday earlier in the year. Anyone buying a property up to £500,000 immediately had an extra £15,000 in Stamp Duty savings which they could spend on property purchase.
Although prices have risen, we have found that transaction volumes are down by about 10 percent compared to the same time last year. Considering this year’s unique set of circumstances, we feel that’s not a bad result and, in fact, we think that volumes could pick up in the first quarter of this year for a number of reasons.
For a start, sales stock is up by around 7 percent and there has also been a big increase in demand fuelled by the Stamp Duty holiday. That could have translated into higher transaction levels this year, but bottlenecks in lending and conveyancing meant those sales have taken longer to reach completion.
Property transactions actually increased by 27 percent between July and September, but average transaction times lengthened from 12 to 20 weeks. That’s why we think transaction volumes will increase as buyers push to complete before the Stamp Duty holiday ends on 31st March.
Overall, there’s reason for optimism about transaction levels. Current volumes are around 10 percent higher than the levels that led to the crash in 2008/9. Circumstances then were different — the banks stopped lending. What we’re seeing now is a gradual slowing of volumes with far less impact on prices, and funds are available. On that basis, we think that a similar crash is unlikely.
To see what your property is worth in todays market, please call our sales team on 020 8445 4008 who will be delighted to offer free impartial advice.
