London Property Market’s Steady Recovery

PETALING JAYA, Oct 28 (Bernama) – On Thursday, the panellists of Knight Frank’s webinar “Investing in London Property” discussed the attitudes of foreign purchasers toward London property, as well as some of the issues that buyers should know while investing in London. Main areas covered include Prime Central London Properties.

The panellists were Knight Frank’s head of London international project sales partner Seb Warner, Knight Frank finance head of new homes Victoria Garrett, and Knight Frank head of residential Asia-Pacific Victoria Garrett. Oliver Knight, Knight Frank Singapore head of international residential project marketing David Hall, Knight Frank residential research partner (IPM) Nicholas Keong, Knight Frank’s Chinese mainland IPM head Samantha Yu, Knight Frank Malaysia head of IPM Dominic Heaton-Watson, and Knight Frank Hong Kong head of international residential sales Daniel Anderson.

Average Value Growth

Knight observed that during the previous few months, the average value of homes grew by 2.3 per cent for the year to September, owing to a search space trend among homeowners due to the Covid-19 outbreak and relatively flat growth in the apartment market.

“However, when we look at what is now happening in prime central London pricing, the figures indicate that the region is continuing on the path to recovery, highlighting the underlying resilience of the prime central London market, despite what has been an exceedingly uncertain background.”

Throughout the epidemic, London’s prices have remained stable and in demand. According to Knight, 2021 has been an unusually robust year in transaction numbers. The stamp duty holiday may have levelled it to some extent that the State implemented last year.

“In June, a record number of deals were completed throughout the prime central London market, as purchasers sought to beat the initial statutory holiday deadline and save the maximum £15,000.” “Inevitably, the increase was followed by a little of attractivity in July and August, after which we have seen sales volume settle very much in line with where they were pre-pandemic,” Knight explained.

Demand for new goods

According to Knight, there has been an upsurge in demand for new-built goods, notably from investors and second-home buyers searching for a house in the capital.

The return of overseas customers is encouraging the demand and the removal of travel restrictions. As a result, the recovery of the overseas market and international purchasers in London is projected to be slow. We also anticipate that the initial wave of demand from overseas purchasers will be centred on the new constructed market, with an apparent appeal for newly built houses, are ready to move in, require no work, and can be acquired off-plan.”

In terms of the rental market in prime London, Knight believes that there has been a transition in recent months. The change is from a tenant’s market to a landlord’s market. As a result, solid demand from renters is there that exceeds supply.

We are witnessing increased pressure on rental value returns. This is where rentals in prime central London climbed by 2.8 per cent in 3Q2021. The third quarter was the most significant quarterly gain in the premium central London rental market. This happened after more than ten years. This is due to renters pursuing a minimal pool of goods, which the renters have mirrored across the market.

Price Climb

Knight noted that typical prices in prime central London climbed by less than 1% in the year to September. As a result, the overall trend has been for more positive growth. So, Knight projects the prices in central London by roughly 2% this year.

“We are anticipating a pretty big rebound back in central London with a 7% increase next year. As a result of pent-up demand from overseas purchasers flooding back into the market. This is happening in a much more substantial way,” Knight added.

The outlook on wealth production in central London offers us confidence in the medium and long term. So, the culture will raise the prices by roughly 25% over the next five years. This will make it the best performing market in the UK. We anticipate seeing comparable substantial levels of increase in rental values in the rental market, driven by the anticipation of acute scarcity and rental supply compared to demand.” This is a good opportuning for London investment agents as well.