The property market in London is still facing uncertainty and the outlook for 2021/2022 depends on the upcoming macro-economic recovery here in the UK and the rest of the world. Brexit and other economic issues affected the London property market before the start of COVID-19 pandemic and 2021 is still going to be a challenging year for real estate investors, landlords, and homeowners.
Fortunately, foreign investment is still strong in the London property market and many homes have been sold this year. This has created an increase in demand for an accurate building survey London investors and home buyers need to ensure their investment is sound. Despite a consistent level of demand, however, house prices in the Greater London area should drop slightly by the end of the year.
Slow Growth Is Still Growth
Traditionally, London is always the most popular property market in the UK. According to a leading building surveying company, the buy-to-let sector in London has seen remarkable growth, offering good returns for both landlords and real estate investors. While growth largely slowed down and prices declined due to the EU referendum in 2016, we are nearing the end of 2021 and the London property market has finally stirred. In May this year, prices of houses in the central London area grew by 0.3%. It’s the first increase in home prices over the past five years. The lettings market is showing signs of recovery as well, just like many other economic sectors in the UK. Between January and May 2021, there were 76% more tenants, compared to the three months leading up to May 2020.
Based on industry signs and trends, the outlook for London home prices in 2021/22 is generally positive. House prices will continue to rise and by 2025, they could be more than 12% higher. However, we could expect that prices in Greater London area could temporarily drop by about 2% by the end of this year. This represents a decent opportunity for homebuyers and investors to spend less money on good properties in great locations. Even so, prices of homes in high-value locations in London are stabilising and they will be the first to go up next year. Last year, house prices grew by about 3% in Greater London, so it is reasonable to assume a rebound in 2022.
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