London housing market – Review of 2022

The start of 2022 saw a return to normality for the London residential property market as both homeowners and investors proved keen to resume their property buying plans now that Covid lockdowns are firmly in the past.

From early January we saw increasing demand from domestic and overseas buyers driving forward the market, as they searched for high quality apartments and larger homes in London. Increasing confidence saw apartments selling well while houses have been particularly sought-after, selling for asking price and often for much higher.  In areas including Hampstead and Highgate many properties were selling for above asking price as some buyers tried to outbid each other.

The ‘race for space’ has remained a driving force amongst buyers looking for a larger home and outside space, typically professionals who have re-evaluated their lifestyle and their requirements since the pandemic.

Demand has been high across London, for all types of property across all price brackets, from £600,000 to £2.5m +.

Transaction levels increase dramatically compared to 2021

Throughout the year, with demand growing for properties at all price points, our London property sales teams have seen solid transaction levels, increasing over the course of the year and up significantly on 2021. Of course, the mini-budget in September and resulting increases in interest rates created a blip as buyers paused to take stock of these events – but this was only temporary – a couple of weeks at most.

With Rishi Sunak now at the helm in Downing Street, showing greater fiscal restraint and boosting confidence across the country, markets have stabilised and buyer demand has remained steady.  After all, most buyers knew that interest rates had been set at unprecedented low rates for years and that this couldn’t last for ever!

If anything, the market has also been buoyed by the many buyers who already had mortgages agreed at low interest rates who were keen to ensure their transactions completed rather than risk a sale falling through and starting again at a new, higher mortgage rate.

New Prime Minister Rishi Sunak stabilises the London housing market

So the recent dramas playing out in UK politics have not had any significant or long-lasting effect on homebuyers’ plans to buy in London.  And the continuing shortages of many types of property means that current sales prices are actually being underpinned by the imbalance between supply and demand.

Thankfully, mortgage rates have started to stabilise and indeed fall, helping to further steady the property market as we put the events of earlier in the year behind us.

Overseas buyers forging ahead with investment plans

Overseas buyers have always been a driving force in the London property market and as the world returns to normal, enquiry levels have been climbing again as buyers resume investment plans that they had put on hold over the last couple of years.

In fact, recent political events have presented some real opportunities to overseas buyers who have jumped at the opportunity to take advantage of the weak pound.  The exchange rate has clearly been working in their favour and now offers them substantial discounts – some are able to buy London property at what amounts to a 20% discount over what they would have paid last year.

Benham & Reeves Directors resume overseas tours

Happily, this year marked a milestone for our directors who were excited to be making their first international trip since the pandemic, accompanied by managers from our overseas offices.  They visited Dubai, Singapore, Malaysia and India in the autumn and were delighted to meet existing and new clients for a series of packed seminars and consultations, attended by investors who were keen to buy London property in the coming months.

More overseas investors buying a property for student children

This year we’ve been seeing more overseas buyers purchasing property for children studying at London universities.  Sky-high rental demand in London means that renting is becoming incredibly difficult – and expensive.   So instead, many parents who live overseas are buying a London property as it makes sound long-term financial sense.

Often, overseas students obtain a visa to work in the UK after university so may remain in the property when they start their career.  If not, parents may use the property themselves or rent it out to take advantage of London’s booming rental market.

Whatever the reason for buying London property, we have seen a marked increase in interest from overseas buyers in the second half of the year.

Cash buyers are unaffected by interest rate rises, and investors from Malaysia, Hong Kong and South East Asia in particular have been busy booking viewing trips with us as they look to take advantage of the weak pound.  We’re now organising trips with investors for the New Year so we’re expecting a busy start to 2023!

Soaring demand from Hong Kong professionals looking for homes in North-West London

2022 has also been the year we saw a huge rise in sales enquiries from Hong Kong professionals moving to London.  BNO visa holders have been relocating to London in increasing numbers as they start to make a new life in the UK.  Most are cash buyers, having already sold their Hong Kong properties, so are ready to buy a new home as soon as they decide on an area they like.  North-West London has been a real hotspot, particularly in smart developments such as Beaufort Park in Colindale where there is now a thriving Chinese community and amenities including a Chinese supermarket and restaurants.

Our China Desk manager, Penny Cheung, has been incredibly busy, with demand incredibly high – around 65% of sales currently are to Hong Kong buyers.  The response is so good that Penny now organises seminars and advice clinics to Hong Kongers who have recently arrived in London to support them through the home search process.

With demand red-hot, we’ve enjoyed huge sales success in the NW9 area this year, with Hong Kongers initially moving to Colindale and Hendon to rent, on the recommendation of friends and colleagues already living here, then choosing to settle down and buy a home.

Enquiry levels at Beaufort Park have been sky-high and some apartments are not even advertised before they receive an offer.  Our team of Colindale estate agents has completed over 60 sales (as at the end of November) this year, the top number of sales concluded in NW9 for any agent listed with Rightmove.  This is the second year in a row that our sales agents in Colindale have achieved this.

And with enquiries still coming in thick and fast, even as we approach a usually quieter time of year, we would like to talk to anyone wishing to sell a flat or house in NW9 in the New Year.

The Elizabeth Line transforms residential areas across London

2022 saw the launch of the Elizabeth Line (Crossrail), and this has been completely transforming areas along its length, creating vibrant new communities and residential areas, all of course, with excellent links across London, slashing commute times. The launch gave a new push to property sales in areas across London, from Southall (The Green Quarter) and Slough (The Horlicks Quarter) in the west to Woolwich in the east.

We recently opened a new branch in Woolwich, close to new development Royal Arsenal Riverside and we’ve seen demand soar here.  These areas are a favourite of renters too so apartments in these locations are extremely popular with buy-to-let investors who are seeing strong rental yields, not only because prices are more affordable but also because of London’s booming rental market.

Demand rises for central London apartments

Demand for apartments in Prime Central London locations was badly affected during the pandemic and saw demand slow.  Now we’re seeing a gradual return to ‘normal’, and with most Londoners back working in the office, many are now keen to return to their beloved city lifestyle – restaurants, theatres and the entertainment venues that we all love.

So centrally located apartments, within walking distance of offices in Zones 1 and 2, the City, Canary Wharf, are selling well and interest is increasing.  For example, we achieved full asking price of just under £1.5m for an apartment in Canary Wharf earlier this year.

Demand growing in Zones 1 and 2

Areas such as Kensington and Knightsbridge are also seeing a resurgence of enquiries from professionals and overseas buyers. Other areas in central London that have continued to generate a lot of interest include Nine Elms and Battersea Power Station – here the opening of two new tube stations at Battersea and Nine Elms has opened up this already popular residential area and added further to its appeal, both with buyers (including buy-to-let investors) and renters.

Further west, at Imperial Wharf, we also saw investors keen to buy second-hand flats as buy-to-let investments – these offer good rental yields of around 5%.  These purchasers tended to be cash buyers, unaffected by interest rate rises, taking advantage of booming rental demand and rising rents in London.

So the year is ending on a positive note, with very much a feeling that it’s ‘business as usual’. With a number of international visits booked in already and strong demand from local buyers too, many buyers are looking forward to purchasing a property in London next year.

If you are thinking of either buying or selling a property in 2023, please get in touch with our sales professionals in one of our London branches or our international offices who can advise you on the current market and how best to make your move.