RESIDENTIAL MARKET OVERVIEW
The post lockdown recovery has continued during the summer and the outlook of market analysts is broadly positive, albeit with an appreciation of the challenges that are likely to emerge due to the medium term effects of the Coronavirus pandemic.
Considering the United Kingdom as a whole, and London and the South East in particular, prices are at their all time highest level following an unexpectedly strong recovery assisted by the Chancellor’s temporary increase of the stamp duty threshold to £500,000. Year-to-date sales in the South East have moved slightly ahead of the corresponding figure for 2019; mortgage approvals have returned to pre-lockdown levels; and following the post-lockdown release of demand, agents are reporting that their sales pipeline is up to 40% higher than it was last year as purchasers are determined to complete their transactions before the end of the stamp duty holiday in March 2021.
However, within the broadly positive performance of the London market there are signs of the predicted decline in demand for homes close to the office as increasing numbers of City workers and employers are appreciating the financial and practical benefits of homeworking. Agents have reported difficulty in both selling and letting homes within the Zone 1 commuting area. The government’s recent announcement of tighter controls in response to the developing surge in Coronavirus cases will inevitably reinforce this, with an attendant decline in hospitality and other services that have grown on the basis of continued support from office workers.
The London property market has shown its resilience on many occasions. However, notwithstanding the initial signs of recovery it is generally accepted that we have yet to see the effects of the pandemic on the economy as a whole. Furthermore, many London residents depend on the hospitality and support sectors for their livelihoods. The end of the Furlough Scheme may not lead to a surge in unemployment as Rishi Sunak’s Job Support Scheme and cuts in VAT may yet prove to be the support the economy needs.
Whereas it has been possible to quantify the recovery, it is only possible to speculate on the effect of these developing issues on the property market. Analysts are suggesting a fall in property values, in the region of 5 to 10%.
It is likely that, within a general downturn, there will be some areas and sectors that continue to perform well whereas others, particularly in central London, may see a decline in demand.
At London’s Surveyors and Valuers we will continue to provide valuation advice based, not only on evidence of completed transactions, but also on interpretation of current activity, reinforced by our long experience in the London property market.