London housing market performance remains robust

There’s positive news for the UK economy and the London housing market. In January, the UK economy defied gloomy predictions and grew at the higher than expected rate of 0.3%.

London house prices appear to be standing firm in the face of recent interest rate rises and wider economic uncertainty. Land Registry data showed that the average cost of a London property remained broadly unchanged in December – up £188 at £543,099, a rise of just 0.03%.

Land Registry figures also revealed that the annual rate of growth in value of a London property grew to 6.7% – an increase of £33,988. Average UK property prices were £26,000 higher in December than at the start of the year, increasing 9.8% in the 12 months to December 2022.

Mortgage rates seem to have peaked and homebuyers are showing renewed confidence, helping to underpin house prices. So, London property remains resilient.

The ongoing investment potential of London property

Recent research from economics forecaster Oxford Economics predicts that London is set to become a global ‘megacity’, with a population of 10 million, by 2037. It predicts that 600,000 high quality jobs will be created but a continuing shortage of new homes means property prices could reach 12 times income by 2037.

This is good news for existing property owners but a challenge for anyone trying to make their first step onto the property ladder.

A successful trip meeting clients across South-East Asia

I and fellow director Marc von Grundherr have just returned from a busy overseas visit to Dubai, Hong Kong and Bangkok – our first in three years.

Investors’ response to our presentations was overwhelming, underlining growing confidence in London property as an asset class.

A highlight of the trip was the Berkeley Group’s Spring into Action event, Hong Kong’s premier UK property event – in which we were honoured to participate.

We work regularly with Berkeley and have eight branches in some of their largest London developments, with two more planned – at the Green Quarter and Grand Union in West London.

The event was well attended, with overseas buyers expressing interest in many property-related issues.

A growing challenge for many is finding a reliable partner to manage their property. Unlike other agents, our work starts when a property completes – with our furnishings, lettings and property management services – we can even help complete UK tax returns.

Most agents don’t offer this level of service but clients realise how simplifying the management of their rental investments makes life easier, keeps tenants happy and boosts their profit margins. So, we were delighted to discuss how we can help property investors long-term.

Building client relationships in Dubai and Bangkok

Another highlight of the trip was our visit to our Dubai and Bangkok offices where we met local clients, discussing how our teams work with our London branches to offer a personalised property management service to clients in Asia.

New developments launch across London

Our Malaysia office has had a busy few weeks, following the launch of West Hampstead Central – a boutique development in a highly sought-after area where rental demand far outstrips supply due to ongoing shortages of new-builds.

Other new launches attracting interest from overseas investors are Aspen in Canary Wharf (E14), which will be Canary Wharf’s second tallest residential building and One Cluny Mews in Earls Court, SW5, a stunning Zone 1 location in the Royal Borough of Kensington and Chelsea.

Demand softens from domestic buyers

So international demand continues to grow, although enquiries from domestic buyers are softening due to interest rate fluctuations and cost-of-living concerns.

Our London sales teams are busy carrying out viewings, although local buyers are taking longer to make decisions.

The rental market remains red-hot

The rental market remains red hot, with our 19 London lettings branches letting properties within days, sometimes hours. Competition remains extremely high and asking rents continue to increase.

This is echoed by property portal Rightmove, whose statistics reveal that rents in London reached a record average high of £2,480 per month in the fourth quarter of 2022 while inner London rents surpassed £3000 per month for the first time.

Rent increases are due mainly to imbalance between supply and demand, with demand far outstripping supply throughout the capital.

Soaring demand for new apartment buildings across London

We have new instructions in several new apartment buildings launching across London. We have apartments to rent at a new phase at White City Living, and our on-site branch is seeing huge tenant demand – with one bed flats achieving £665 per week and two beds £850 per week.

In Hampstead, demand continues to outstrip supply and we desperately need new stock – we have rented all our stock at Millbrook Park and urgently need new instructions here.

Our Woolwich branch at Royal Arsenal Riverside is seeing flats let quickly – a real draw is the development’s location next to the newly opened Elizabeth Line station.

Call us for more information

If you are buying, selling or letting a property in London, please contact your local Benham & Reeves branch to find out how we can help.