Are you thinking of buying property in London in 2022? If so, it is a good idea to acquaint yourself with the London property trends. Of course, there is always unpredictability when it comes to the property market. In a post-Brexit world, reeling from the COVID-19 pandemic and with the threat of an unstable security situation in Europe, the markets are more uncertain than ever. But it isn’t all bad news. Prices will go up, there will be plenty of buyers, and stock levels should start to rise again. As of February 2022, this is what we expect for the year ahead.
The impact of Brexit
Despite all the worst predictions, it seems that Brexit- the UK’s exit from the European Union- had minimal negative impact on London property trends. While changes to residence and work regulations spelt trouble for many employees, those with a high net worth were relatively unaffected. This means that there was a negligible impact on the rental market, but property purchases remained unscathed. Of course, Britain’s actual exit from the EU occurred during the pandemic, so it is difficult to ascertain what was Brexit fall-out and what was due to COVID-19. However, we know that prices rose across the UK by at least 10% between 2021 and 2022, pointing to something of a boom. Furthermore, trends show that values will increase over the coming years, easing some of the post-Brexit anxiety.
In London, prices are set to increase by between 3% and 6% over the next year, which is good news for both buyers and sellers. According to Zoopla, as of the start of 2022, the average price was an impressive £1,002,447. But, London prices are prone to fluctuation, meaning there could be some ups and downs ahead as it tends to bear the brunt of any economic uncertainty. Between 2016, when Brexit was announced, and 2020, prices only increased by around £8000, demonstrating a slight stagnation. But a period of sharp growth means costs today are almost 9% higher than in 2016. The current forecast of around 6% over the next 12 months implies that properties will still be affordable for clients while sellers can still make a profit.
The impact of COVID
Just as we thought we had escaped Brexit and things would return to normal, the COVID-19 pandemic hit. In early spring 2020, the first cases were announced, leading to travel restrictions, nationwide lockdowns and stringent quarantine measures. In the UK, businesses and citizens were closed at home for months at a time to contain the spread. Of course, this had a rather severe impact on London property trends.
While the pandemic appears to have abated, the industry is yet to snap back to how it was before. So far this year, appraisals have been up 7% on the previous five-year average, and the number of new buyers has averaged out at 54% more. While supply is yet to catch up completely, transaction numbers are predicted to be higher this year than 2021. But this is not enough to consider the market stable, and there are likely to be points during the year whereby sellers do not list as they cannot find a property they want to buy.
The good news is that with restrictions on travel less stringent, there will be strong interest from abroad. There was an increase in the number of foreign buyers at the end of 2021, and we expect to see that continue as long as the pandemic situation remains stable. Considering seasonal buying patterns, spring is the time to buy and sell!
Conflict in Ukraine
Ukraine and Russia have been engaged in conflict since the end of February 2022. This conflict has resulted in wide-ranging sanctions from the EU and other countries against Russia. These include asset freezes, travel limitations, and restrictions on the international SWIFT network. At the time of writing, it is unknown if these sanctions will go further and what the impact could be. Uncertainty over the direction and extent of the conflict has caused ripple effects on foreign exchange markets, and it could have a knock-on effect on London property trends. Should things escalate, this will also further impact the market, but the extent of this is impossible to gauge at this point.
Purchase prices
As mentioned above, prices in London are expected to increase by up to 6%. This demonstrates a slowdown after a year of price increases driven by UK government tax breaks. The stamp duty holiday enforced because of the pandemic led to a big uptick in buying and selling as people rushed to enjoy the decreased fiscal liability. But some industry stakeholders believe there is a discrepancy between wealthy boroughs and other areas. For example, prices are expected to increase by 6% in wealthy and high-end areas, while the increase will be around 3% in less affluent areas. But the end result remains to be seen as there are many variables and unknowns that could have either positive or negative impacts on London property trends.
Rental prices
In terms of rental prices, much will depend on factors such as the pandemic and the security situation in Europe. But according to Statista, during the course of 2022, rental prices are expected to rise by between 6 and 7%. This comes after prices fell during the first year of the pandemic in 2020. Since then, prices in prime central and greater London have been on an upward trajectory and are expected to peak this year. However, the statistics website predicts that costs could be set to plunge for monthly renters at the end of the year and the start of 2023. Currently, the average rental price across the entire city is £1757 per month. But as mentioned, during somewhat tumultuous times, we cannot be completely sure what lies ahead for London property trends.
Up and coming areas
Marylebone
If you want a piece of the action London has to offer, then Marylebone is the place for you! Popular with professionals, single people, and retirees, most of the large, stately homes have been transformed into spacious apartments. As a neighbourhood, it is home to plenty of shops, restaurants, markets, gyms and leisure centres, and of course bars and nightlife. Restaurant-wise, it ranges from affordable ethnic street food to high-end Michelin star eateries. It enjoys excellent transit links and can be navigated easily on foot, with the main business districts accessible within half an hour. For fans of music, there is the Wigmore Hall which puts on over 450 shows a year. It attracts a musical crowd and plenty of tourists throughout the year. It is also not far from Regent’s Park if you want to spend some time running, walking, or enjoying the greenery. For foreign residents, it has everything you need to feel part of a community, and people are friendly and welcoming.
Notting Hill Gate
If you don’t think you are familiar with Notting Hill Gate, it is more than likely you have seen photos of its beautiful pastel coloured homes online. A charming, friendly and welcoming neighborhood, it is also known for being one of the most vibrant parts of the city. Fashionable, hip and home to plenty of cool eateries and boutiques, Notting Hill Gate, is the place to be. It is home to the world-famous Portobello Road and its market, home to art galleries and shops full of beautiful antiques. There are plenty of choices when it comes to food, with dishes from every continent available throughout its streets. Every year, the area is also home to the Notting Hill Carnival. Still, the rest of the time, it is about stunning Victorian homes, quiet squares, and trendy residents, particularly professionals and couples. It is well linked to Paddington and sits on the Central Line and the Hammersmith and City line. If you want to live in one of London’s most interesting neighborhoods, this is it!
Swiss Cottage
The area of Swiss Cottage is fast becoming one of the most desired locations in London to buy and rent property in. The Jubilee line provides easy access to Canary Wharf and other key hubs. For families, it is also known for its excellent private schools and several highly-rated state institutions. In terms of safety, it has lower crime rates than the borough, with around 9 per 1000 residents. Some of the hottest streets in the area include Crossfield Road, Eton Avenue, Belsize Lane and Fellows Road. They are known for spacious flats and houses, which are constantly in demand. The area is also home to a Waitrose, Sainsbury’s Tesco Metro, a specialist Iranian market with incredible fresh fruit and vegetables, and a farmers market.
St John’s Wood
A stone’s throw from Regent’s Park, St John’s Wood is home to plenty of well-heeled residents, including business people, celebrities, and creatives. While it is one of the city’s priciest areas, it offers the perfect combination of urban living with a sense of not being far from the countryside. It also features several public parks, an open-air theatre, and the famous Primrose Hill with its stunning views. The high street has many eclectic independent shops and some of the essential chains in the vicinity. When it comes to eating and drinking, there are a variety of cafes, pubs, restaurants and more, offering cuisine from around the world. St John’s Wood is particularly popular with professionals, but it is also an excellent place for families.
D&A Group
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