Posted on Tuesday, May 31, 2022
Market conditions are changing
Paul Ruocco, Managing Director of Alan Goldin takes a close look.
“On the sales sidewe aren’t seeing any surprises with London remaining the most expensive UK city to buy a home in, with an average price of £476,800 almost double the UK average price. Pent up demand remains high, and along with the shortage of properties for sale, is fuelling the rise in prices.
“Prime outer London, as opposed to central London, is predicted to see a modest 4% increase over the next 12 months. However, with a high value property this increase is significant. The average flat price in Temple Fortune is around the £500k mark with houses taking you up to over £1m.
“The race for space continues to dominate the market with buyers focusing on green spaces in terms of balconies, gardens and proximity to parks and commons. Equally 'annexe' and 'garage' have become two of the most searched terms as buyers look to create home office space.
“With the base rate having been increased three times this year from 0.01% to 0.75% borrowing is becoming more expensive. This, together with inflation is putting pressure on people already dealing with the cost-of-living increases. As a result, mortgage applications are becoming increasingly complicated across the board, with most brokers (86 per cent) saying the affordability aspect has become “more complex than ever” due to lenders “applying so many different rules.
“The prime central London lettings market is a great deal more positive than it was a year ago when we found ourselves in another lockdown. 2020 was dominated by rental discounts whilst 2021 began to see rental income rising so we can look forward to a more positive year ahead.
“We are seeing a rise in demand for high quality rental properties across North and central London as London reopens for business, attracting business executives and overseas entrepreneurs keen to resume their corporate London lives. The international student market is also picking up and we are seeing graduates and students coming to London from all over the world with around £30k to spend on their rent.
“There’s no doubt that the cost-of-living rise allied to the energy price hike is going to affect everyone but we are confident that the overwhelming majority of our tenants are financially resilient. In some ways, these factors, may support the rental market as tenants may opt to continue to rent in the medium term giving them a flexible option as markets settle in the wake of the pandemic.
“We are not alone in seeing a very large number of our tenants deciding to renew their tenancies during the first quarter of 2022. Home Minders have good contacts with most of the letting agents in London, and they are all reporting this trend of tenants remaining where they are while there is still uncertainty around the economy, job prospects and the rising cost of living.
“Given demand outstripping supply within the rental market it’s not surprising that rents have started to rise and are likely to continue to do so during the rest of the year as people return to some form of office life. ”Many would-be landlords sold up last year to take advantage of the stamp duty holiday, and this is adding to the shortage of supply at the moment.”
Back in the office
“I am delighted to confirm that we are back in the office. Like many other companies we have had to deal with staff shortages due to isolation over the past few months and I’d like to pay tribute to all my colleagues for the way they have responded. Whilst our digital technology has enabled everyone to continue to offer a good service, it’s a great relief to be back together and operating as a team."
