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London’s Housing Market Recovery Over the Last Year

Posted on Monday, May 10, 2021

In January 2020, COVID-19 was causing major problems in Asia; but most presumed it wouldn’t impact the rest of the world. However, just two months later, the UK was put into lockdown, which had serious ramifications for London’s property market.

Amazingly, the capital managed to recover swiftly. Even better, most industry forecasts agree that the future looks positive, in terms of volumes of sales and average values. Here’s more information.

At the start of the pandemic

Before COVID-19 hit, London’s housing market was performing well, with most areas reporting annual house price growth in the 12-month period ending February 2020. However, when lockdown hit, numbers of sales stagnated. This was unsurprising, given that house viewings weren’t permitted at this point.

By the summer, the situation was already improving. Viewings were allowed again, albeit with some restrictions. Chancellor Rishi Sunak introduced a stamp duty holiday for all property purchases priced up to £500,000, which reignited interest in the market.

Low interest rates may have also played a part in boosting sales. Mortgage lenders were offering highly competitive deals, which appealed to homebuyers looking for a bargain in the capital.

In fact, despite all the uncertainty brought about by the pandemic, RICS data suggested that sales actually increased in London during this time.

A buoyant market

By autumn, parts of London were experiencing record levels of interest. ONS reported that average property prices rose by 4% in the year ending September 2020; the speediest growth in the capital since 2017.

Volumes of sales were so high in some areas that demand started to exceed supply, which in turn, pushed property prices up. As the end of the year approached, experts started to speculate about what 2021 would have in store; particularly once the stamp duty holiday had come to an end (then scheduled for March 2021).

London’s housing market at the start of 2021

Reports running to March 2021 show that volumes of sales were still high at the start of the year. This is partly to do with the extension of the stamp duty holiday, which encouraged homebuyers to keep investing in the capital. The third lockdown (January to April) didn’t have much impact, particularly as viewings were permitted this time around.

At the time of writing, property prices are still high, showing just how resilient the market has been during the COVID crisis.

Some key points about the property market during this time:

-          Average property prices in London rose by 6% during 2020.

-          Mortgage lenders approved over 100,000 mortgages in November 2020 alone; the highest figure in 13 years.

-           According to ONS data, the average price of a house in London was £496,269 in February 2021.

What’s in store for the future?

Industry representatives predict that the market may slow down once the stamp duty break is over; but that this might not be a bad thing. As one insider comments: “A far more steady return to form is likely to be made and this will ensure that any crash landing as a result of the stamp duty holiday ending is going to be minimised within the capital.”

Many also agree that the market will be buoyed by the vaccination programme, and people returning to work. Both factors will give homebuyers the confidence to invest in property in London.