Does London property face a stagnant future?
Between Brexit, the HS2 rail link and an ever-widening margin between property values and wages, affordable properties in the capital are a rarity – and times are getting tough for sellers.
For decades, the London market has been a sound investment for potential homeowners, with phenomenal year-on-year value increases and high-paying jobs aplenty. Nevertheless, prior to the financial crisis almost a decade ago, many property buying experts within the industry began to question whether or not a difficult future lay ahead for the capital – especially when prices appeared to continue rising perpetually.
Flash-forward to 2017 and cracks are starting to appear in the market, as the number of wards where the average price is below £300,000 has plunged from 104 to 40 in just 12 months. Many across the capital see this as a good thing – an increase in the value of your home is always welcome – but for those who look a little deeper, there are a number of reasons for London residents to start worrying.
Although the capital enjoys wages higher than those available in other regions of the UK, the disparity between property prices and those higher wages is still growing at a rate that essentially locks younger potential homebuyers out of the market. This is ultimately leading to a slower rate of sales across the board and a growing element of stagnation.
With its reputation for big business, London attracts many young workers seeking wealth through enticing positions with large companies. However, with the shadow of generation rent hanging over their heads, the urge to purchase a place to call their own is hard to ignore – but is that even possible?
With only 40 out of the 649 London wards still offering prices below £300,000, it is perhaps unsurprising that younger generations are starting to look elsewhere to put down roots. Combine this with the number of companies moving, or planning to move out of the capital to save on wages and land prices, and many of London’s residents are finding it increasingly hard to sell.
Despite fears over the Brexit referendum, property prices in the UK have increased by around 6.7%. However, in London prices rose by 8.1%, strongly influenced by the lack of new homes necessary to house its increasing population. Plus, with property tax hikes such as stamp duty dissuading landlords and investors from buying further homes, many estate agents in the capital are preparing themselves for a quiet 2017.
So, what about those looking for a fast house sale in London? Unfortunately, consumer interest in purchasing expensive homes in the capital is starting to dwindle. This is due to the lack of prospective homebuyers with available funds; the possible departure of large EU-based companies and banks to cities such as Paris; and the soon-to-be-open HS2 rail link, which will drastically reduce the commuting time to the city centre from areas as far north as Leeds.
For many owners, the sooner they can sell, the better. With London house price growth set to slow greatly over the next 12 months while the rest of the UK continues to thrive, experts have suggested that certain buyers could find themselves in negative equity within the next decade.
Luckily, property buying companies are looking to buy homes across London for cash at competitive prices – allowing vendors to avoid expensive estate agency fees, while providing a fast, efficient exchange.
Looking to avoid a potential price crash in London? Ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.