London property sales market remains resilient after recent interest rate rises

Demand for properties in London remains stable although we expect recent interest rate increases to have an impact on market confidence over the coming months. With inflation still at 8.7% in May, the Bank of England increased the interest rate to 5%, reducing many buyers’ budgets.

Meanwhile, the UK’s largest mortgage lender, Halifax, recently reported that average London house prices fell 1.2% year on year in May – to an average £536,622, the first annual decrease since 2012.

But while demand is slowing amongst some domestic buyers needing a mortgage, the property market generally remains resilient, with the interest rate rise not dramatically affecting market conditions. Some buyers are reassessing their budgets; they’re continuing their property searches, but perhaps looking for a smaller property as borrowing costs increase.

In some sectors, demand is increasing, from renters (who can afford to) buying their first home to escape frenzied rental demand, to wealthy overseas cash buyers benefitting from the weak pound and finding value by investing in a slightly subdued market.

May sees an unexpected increase in property sales in London

Zoopla unexpectedly reported that London property sales were 10% higher than the average over the last five years, in the four weeks to May 21st. So the market is nuanced.

Longer mortgage terms, existing fixed rate deals, greater equity in existing property, high levels of employment and rising salaries, mean we expect house prices to remain reasonably stable.

International property buyers driving demand

Many of our clients are cash buyers, based overseas, so interest rates don’t affect them, while the weakness of sterling remains an advantage, offering greater value to overseas buyers.

Often, they are buying property for adult children to live in while studying or working in London, especially as renting remains difficult and expensive. These buyers are looking for a good deal in this more subdued property market.

Value for money a priority

Whatever a buyer’s circumstances, value for money remains key. Regeneration projects with good transport links, on-site amenities and low service charges are sought-after. And buying an apartment from a reputable developer is a priority for everyone.

Hotspots for property buyers

Our London and international offices are selling multiple apartments across several stand-out developments.

The North-West Quarter (in NW6) by Countryside is our first global release to investors – a Zone 2 location with Zone 1 transport connectivity at attractive entry level price points from £520,000 and rental yields of 5.5%. Only minutes from Maida Vale, new-builds are rare here, so enquiry levels are high.

Also popular is Wembley Park Gardens in North-West London, by Barratt, part of a £2.5 billion regeneration scheme, one of the largest in the UK. With excellent transport links (only 13 minutes to Baker Street) and prices from £399,900, landlords can achieve rental yields of up to 5.15%. We’ve sold multiple units at our Israel launch and will be launching in other countries soon.

Colindale Gardens remains popular and a favourite with BNO Visa holders from Hong Kong. This Redrow development in NW9 is 22 minutes by train from King’s Cross, with apartments priced from £365,000.

These and other high spec developments with strong investment potential are selling well to domestic and international buyers.

Rents in London continue to soar

Rental demand in London is soaring, with rents close to all-time highs, due to the imbalance between supply and demand. Zoopla’s recent market report stated that London rents are up 13.5% in the year to April 2023, with renters now spending 40% of their gross salaries on rent and rents growing faster than average earnings for nearly two years, now averaging £2000 per month.

New apartments completing across London

Thankfully, we have rental apartments completing at several new developments, with demand already strong. We have new instructions at White City Living, where we have an on-site branch, with new flats being snapped up immediately.

We’re also seeing growing interest in The Silk District, by Mount Anvil, in Whitechapel E1, a brand new development at the heart of one of London’s most historic neighbourhoods, close to London’s financial districts.

Growing numbers of Japanese corporates relocating to London

Our Japan Desk is busy finding homes for Japanese corporates moving to London on secondment, at what is the busiest time of year for relocations. Areas such as Ealing (Dickens Yard), Fulham Reach and Sovereign Court (Hammersmith) and Nine Elms Point (SW8) are sought-after, and we urgently need more instructions.

If you own a buy-to-let apartment in these or other central London locations, please get in touch with Yoshi Tsuji, Head of Japan Desk, as he has waiting lists of fully referenced corporate tenants ready to move into these developments.

Our new branch – our 20th – opens at Grand Union in West London

We’re delighted to announce that July will see the opening of our 20th London branch – in Berkeley’s Grand Union development in West London. This vibrant new waterside development offers luxury homes, amenities and workspaces, and is already a hit with London’s renters.

The opening of our on-site branch means we’ll be on hand to secure a home for professionals looking to live in this stunning location.

Contact our lettings and sales teams across London

If you are completing on a new-build property in London, please contact your local Benham & Reeves branch for a free rental evaluation.