What Is Happening To House Prices In The UK & London?
The housing market in the UK has defied expectations and forecasts this year, with the growth seen already surpassing some of the figures seen at the same time in 2019. So how has the market fared over the course of this year so far and what do we expect to see in the upcoming months?
What Has Happened This Year?
The UK’s highest value real estate, meaning any property worth £5million and above, have seen a surge at the beginning of 2020, as well as in the months running up to September this year. The sales of these properties were 12% higher in the first three quarters of the year compared with 2019. These sales accounted for the strongest third quarter that has been seen for London in five years. While international arrivals into the UK are often the ones buying high-value real estate in the capital, this year arrivals have been exceptionally low this year due to the pandemic. According to figures by Savills in the UK, sales for properties worth £5million or more came to 88 properties in the first quarter of 2020. This dropped to 43 in the second quarter while lockdown ensued in the UK. The pent up sales from this quarter likely then caused the sales to boost by a further 95 in the third quarter. Total sales therefore come to 226, equating to £2.56billion and already ahead of sales from 2019 by 5.1%.
What Are Our Predictions For The Future?
With the pandemic, it has been widely hypothesised that many people will look for real estate outside of metropolitan areas. Working from home has become a mainstay and fear of infection from COVID-19 has certainly contributed towards this becoming a permanent fixture in UK businesses. However, over half of the aforementioned sales were in the highest valued London locations, including Mayfair, South West & Battersea, Kensington & Chelsea and St. John’s Wood. While many have flocked to the countryside, these figures show that Central London real estate is still a prime market for the wealthy.
These figures are of course ahead of the new stamp duty charges due to be brought in for overseas buyers in the coming year. Over the summer this year it was announced beginning in April 2021 that there will be a 2% surcharge for overseas buyers looking to purchase property in England and Northern Ireland. This will apply to any person overseas who does not spend more than 183 days out of 365 in the UK, starting from the point of 12 months before the property transaction and ending a full 12 months after. Purchases that have had contracts exchanged before the beginning of March 2020 but have not been completed by the time April 1st rolls around, these may be subject to a transition period although this has not yet been elaborated on by the government. Of course, overseas first-time buyers are still entitled to stamp duty relief up to the value of £300,000 but they will also be subject to the 2% surcharge. If, as a buyer, you do conform with the rules on maintaining a 6-month residency over the total period of the property acquisition, the stamp duty surcharge is refunded.
With all that in mind, it may be somewhat unlikely that we find a vaccine that will allow overseas buyers to live in the UK for that period of time before the new rules come into force. With overseas travel still subject to restrictions, this will no doubt continue to affect the sales over the next year. For the meantime, residential values for London are still sitting 21% lower than their peak and may likely remain there until international travel fully resumes in the future.
We hope you found today’s topic delving into how the house prices have fared over the last year helpful, as well as our predictions for the future based on what’s happened so far this year. If you have any questions, please do get in touch as we’d be happy to help! You can reach out to us through our social channels or through email at firstname.lastname@example.org. If you’re a property investor looking for help and advice on your new project, you’re looking for help with bridging finance or perhaps you’re an investor looking for better returns on your money, please do reach out.