The COVID-19 pandemic led to dramatic changes in how we live and work and has had a huge impact on the UK housing market.
By Q2 2021 the London sales market was holding up well but lagged the strong growth seen in other regions. The rental market on the other hand was weaker but showing good signs of recovery. It's left many sellers and landlords wondering what will happen as we move into 2022 and asking themselves: is now the right time is to sell or let my property?
We caught up with James Hyman, head of residential at Cluttons, to hear the trends his teams are seeing across the London sales & lettings market.
1. Lack of stock
The Central London sales market has been stagnant for the past few months since June and the end of the stamp duty holiday, this is largely due to the lack of fresh stock and current stock being overpriced or out of line with current demand. However, in the last few weeks the market has noticeably picked up as workers return to the City and the traditional autumn selling season returns. My advice to those looking to sell is to capitalise on this lack of stock, get your property on the market now before supply increases and listen to your agent on pricing. A well-presented, well priced property will stand out and sell in a reasonable time frame.
2. Well priced properties are selling
It’s simple, anything priced in line with where the public's perception of the market is currently transacting is generating strong interest. We have numerous recent examples of vendors who have agreed to reduce their prices, they have instantly had multiple viewings and their properties have successfully gone under offer. Vendors who don't act on their agent's instruction and reduce their prices now are going to come unstuck in the next few months when more stock comes to the market. This will become more apparent as the repercussions of the end of the furlough and government support schemes kick in, and we are unfortunately likely to see more motivated sellers and distressed sales. I would say the majority of properties are currently about 4% adrift of where the market is.
3. Return of the pied-à-terre
A noticeable trend is the return of the pied-a-terre buyer which is taking up the demand we’ve lost from first-time buyers. Buyers who have moved their families to the country during the pandemic but now have to return to the office are finding that soaring hotel prices and train fares back at pre-pandemic levels are making owning their own London bolthole increasingly attractive.
4. The Central London lettings market is booming
What is remarkable about the recent correction in the lettings market is that it has happened over such a short period of time - on average there has been a 15% uplift in rents from mid-July to now. Demand is now where, if not higher than, we would expect the market to be at this time of year in a 'normal' year. What’s more, we expect this demand to keep going right up to Christmas as more and more people are coming back to work in the city and overseas students and international business returns. This demand is not just for short lets either, renters are looking to secure a minimum of two years rental which indicates that they feel secure in their jobs and think that rents are only going to go up in coming months.
5. International students and corporate tenants are back
The biggest impact on rents has been the return of the international students - this alone has increased rents by around 10% in areas such as Kensington and Chelsea. Our Chelsea office has seen a huge bounce back in both student renters at around £500-£1000 per week and also the high-end corporate tenants at £4,000+ a week, for example they have just rented a detached regency house on Kensington Gate to a CEO and his family who have been relocated from the USA.
In Wapping/Limehouse/SE1/The City we have seen a notable return of the £3,000 per week applicant, the penthouse market, we have literally gone from not having a single viewing in a week to not enough stock and phone ringing off the hook. Properties such as this one in Oliver's Wharf .