Now that there have been consecutive months where a focus has fallen on London house prices slowing and even falling, there has been a lot of speculation regarding the future of the property market in the capital. Most professionals have an opinion but property firm JJL has captured a lot of publicity by claiming that the golden age of the London property market is over.
This is a great headline that makes people think and first of all, there will be people who will question if there was a golden age for the market. After all, good news for someone when it comes to buying or selling property usually means that there is bad news for someone else. Anyone who managed to buy property in the past will have been delighted with the rise of property prices in the capital but if you have been keen to get on to the property ladder, the sharp rise in property prices would have seemed far from a golden age.
Context is crucial in the property market
With that context, it is understandable that some people will be dismissive of the thought of a golden era, but it cannot be denied that prices were booming. It is the notion of booming prices being over that JJL were referring to and they state that property owners should expect annual property price increases of 2.5% between 2017 and 2022. Over the past 20 years, the rolling average comes out at 6.9%, so there is definitely a dip in the market. However, it shouldn’t be forgotten that the prediction still suggests prices will continue to rise, which means that anyone looking for a fall in London house prices may be let down.
The property firm points the periodbetween the 1980s and 2008 as the real golden age in the British property market with prices rising in real and nominal terms. The crash of 2008, and subsequent issues have certainly left their mark, but the market has rallied. Even in the wake of Brexit, which had many property specialists suggesting that the market would crumble, prices have been robust and demand has been strong. However, it is the pre-crash trends and growth that people look back on and these are unlikely to be replicated at any point in the foreseeable future. That is not to say they would never happen but it would probably take a range of unforeseen events to create this situation.
There is still growth tipped for London property market
For the period between 2018 and 2002, house prices in prime central London are tipped to grow by 8.7%, which is the slowest of all regions. Central London development is expected to rise by 9.8% and in Greater London, the rise is tipped to be 11.4%. The UK average is listed as 12.6%, with the London figures all coming in below this, but it is not as though London is the only area in this regard. The North, the South East, Scotland and Wales have also been tipped to experience a growth rate slower than the average.
It is good that property specialists are willing to make predictions but just because a company says something doesn’t mean that it will come true. For many people, the most important aspect in the London, and UK property market, is the lack of available homes. More so than Brexit or the economy, a lack of affordable housing, which means demand outstrips supply, is the issue that is likely to leave house prices climbing upwards for many years to come.
In one sense, it is fair to say that the golden age of the London property market is over but equally; there is still a lot to feel positive about in the English capital. If you are looking to make a move in or around London, get in touch with Regent Property.