London property market: housebuilding and house prices remain buoyant
Over the past month, the UK housing market has seen a major revival as restrictions have been lifted. As both buyers and sellers return to the market, how is the London housing scene fairing?
Knight Frank is the latest major UK estate agency to reveal the high level of resurgence in the UK’s property market. Its data showed major rises in successful sales completed, as well as a tightening of the gap between asking price and selling price. New prospective buyer numbers are also on the rise, with Knight Frank being one of many agencies to reveal an enquiry boom.
In the week leading up to 6th June, Knight Frank revealed that the number of offers accepted in London was 34% up on the five-year average. It was also the third-highest weekly figure so far this year.
Buyer demand in London was also 54% ahead of its five-year average, according to Knight Frank. This compares to 14% for markets outside the capital for the week up to 6th June.
While house prices may have dipped slightly in London since March (-1.7%), they are up 1.5% year-on-year. As demand continues to climb, coupled with slightly restricted seller numbers, the expectation is that this will support house prices in the city. For property investors, many are seeing the current climate as a good opportunity to secure assets in London.
Asking price vs sales price gap shrinking
Another important figure revealed by Knight Frank was the current discount level. Its research showed that the average gap between asking price and sales price was now 5.5%, compared to 6.4% during lockdown. This demonstrates both realistic pricing from sellers, and a willingness from buyers to push ahead with deals.
In recent years, London has seen some major competition from the regions of the UK. Homeowners, investors and even renters have become more likely to search for property outside the capital. However, the latest figures show that, while revival may be slower in the city, London is holding its own.
Andy Shepherd, chief executive of London estate agents Dexters, said: “We’re tremendously busy across all of our 70 London offices. Transaction numbers are increasing daily, over the past two weeks we’ve agreed sales on over 250 properties and arranged lettings on over 600, so 85 a day or 10 an hour in the working week.
“Immediately before lockdown we’d seen the best market for five years. However, comparing last week with the first week of March we are 60 per cent up on transactions.”
Construction growth continues
Latest figures from residential consultant Molior show that building plans for thousands of new homes are being fast-tracked in London. The company’s research reveals that authorities have approved 22,000 new properties so far this year.
This means new home approvals were at the same level between January and May this year as in 2019. Even during the height of lockdown in April and May, councils approved planning permission on 4,618 homes.
Craig Hughes, global head of real estate at PwC, said: “There continues to be a massive social need to build affordable housing in London, and a massive economic need to create jobs.
“Both factors mean it was of the utmost importance to get construction sites back up and running in a safe way. We must continue to accelerate approvals and the delivery of high-quality, affordable new homes.”
London also continues to be one of the country’s main drivers of build-to-rent. There are currently around 74,892 such units in the capital. Outside London, there’s a total of around 82,620 across the whole country, according to the British Property Federation.
Since the coronavirus outbreak, many builders have begun to place more of a focus on slightly different aspects of developments. Having a balcony or outside space is now top of the list for investors and homeowners alike. Home-working spaces, whether private or communal, are also expected to be a top priority for buyers in the capital.