Q2 – 2024 | London Property Market Update

The political stability that the new government wants to offer appears to have fostered renewed optimism, allowing for more certain planning and decision-making. Available properties have increased by 9% compared to the same quarter of the previous year, while sales have risen by 10%, according to TwentyCi. Generally, properties with energy ratings from A to C tend to achieve sale prices closer to the initial asking price. Moreover, house prices rose by 0.3% in July, leading to an annual growth of 2.1%, according to Nationwide. The recent Labour Party victory and the appointment of the new Prime Minister have contributed to a sense of certainty, despite ongoing significant international conflicts. London remains an attractive destination for long-term investment, with buyers employing clear and well-defined asset diversification strategies.

Changes and Market Impact

In the March Budget Former Chancellor Jeremy Hunt announced the intention to phase out non-domiciled (non-dom) status. The Labour Party also promised, in its pre-election manifesto, to abolish this status permanently, replacing it with a more modern regime for those temporarily residing in the UK. Despite concerns about potential departures of non-dom buyers, the market continues to show strong interest from the high-end segment. While stock levels are increasing, the cost of market entry remains high, especially for non-residents who must pay an additional 2% stamp duty on top of the standard rate. The first base rate cut at 5%, by the Bank of England since the start of the pandemic will further support market activity, although the Bank has emphasised the need for caution regarding expectations for future cuts.

What to Expect

While there are no absolute certainties, those actively working in the market can anticipate that there will be no significant changes in the coming months. Some segments of the real estate market may continue to thrive, while others may face additional challenges. This second quarter remains a cautious period, with asking prices staying relatively stable. The market will be influenced by the international scenario, including the ongoing war in Ukraine, potential agreements in the Middle East, and the upcoming US elections in November, which add further uncertainty.

Case Studies

London operates within one of the largest real estate markets in the world, characterised by numerous micro-markets. While the prime areas of the city do not currently exhibit sudden spikes in activity, the outer suburbs show a lively and consistent level of activity, driven by local buyers seeking long-term residences. Recently, by searching for a Freehold house in the northern part of the city for clients, I observed an increase in demand for independent houses from both end-users and investors, with a significant number of properties under offer. Investors, in particular, often plan to renovate and enhance these large houses for high-level HMO rentals, including cleaning services, all-inclusive bills, and well-profiled tenants. Additionally, there is a noticeable rise in buyers seeking residential units for their children who work or study in London.

If you are considering the purchase of a property and would like some impartial advice, do not hesitate to contact me. I will be more than happy to help!