A pair of aces representing the property market

From the property market crashing after the 2008 credit crunch to house prices growing exponentially and then stagnating during Brexit negotiations, the housing market has seen plenty of twists and turns in the last decade or so. And that’s before Covid even reared its head. 

The pandemic has brought further uncertainty to the market, with initiatives like a stamp duty holiday and 95 per cent mortgages created to give the property scene a much-needed boost. But that doesn’t necessarily mean that homeowners should rush to sell.

This is especially true for landlords, who already have a reliable income stream through regular rental income. In London, for example, the market still hasn’t recovered to pre-referendum levels. Therefore, the current climate might not offer the best one to sell your London property. 

However, many landlords are probably still asking themselves if they should stick or twist in the property market. Which is why we’ve put this short guide together to provide you with an outlook on the current state of play in the market, and why lettings still trumps sales. 

Buying and selling initiatives 

In July, the Government announced a stamp duty holiday on the first £500,000 of all homes in England and Wales. Then, they went one step further, announcing 95 per cent mortgages for first-time buyers in an effort to turn “Generation Rent” into “Generation Buy”. 

While details are still sketchy around how the mortgage scheme will work, the stamp duty holiday is in full effect until March 2021. The only problem is that it doesn’t necessarily apply to the London housing market. 

The average house price in London currently sits at just over £650,000, which is significantly over the £500k cut-off point for the stamp duty holiday. While 95 per cent mortgages are barely in the blueprint stage, with no exact date for when they will get the green light. 

These house-buying initiatives combined are great for some aspects of the market (primarily homes under half-a-million that attract first-time buyers), but for a mature London market, they don’t provide much incentive to sellers or buyers.  

The London property scene

For many years, London – much to the envy of the rest of the UK – operated in its own property bubble. Unfortunately, that bubble had to burst at some point – and we’re currently seeing a period of stagnation in the market. 

London house prices continued to fall as recently as July, despite increased demand from buyers. Respondents to a Royal Institution of Chartered Surveyors (RICS) UK Residential Survey also don’t expect the demand to continue. 

That leaves would-be sellers in a precarious position. Selling your home now means potentially taking a hit (prices are expected to drop by a further one per cent in 2021) and seeing demand decrease over the next six months. 

The outlook is similar in all parts of the capital. 

North East

Average house prices in the north east of London currently sit at £588,848, which is a significant 9.8% from the previous 12 months. Overall, homes in northeast London lost just under £60,000 of their value. 

North West

The current average house in north London is £950,453, which is a 6.4% drop from 12 months ago. Prices in northwest London are generally swayed by high-value areas like Hampstead, Camden and Islington. 

West

Property prices are by far the highest in west London, with the average home valued at £1,026,175. However, just like the rest of the capital, they’ve seen a dip. West London properties have fallen by 1.39 per cent, which equates to minus £14,408.

Central London

Central London is the super-prime hotspot of the capital, but it’s taken a hit in recent years. The average property price currently stands at £1.3m, which is a value change of minus £143,452 over the last 12 months. House prices have fallen by 9.9%. 

South West 

Southwest London is the only part of the capital that has seen an increase in house prices over the last 12 months. Homes have increased 4% to an average of £934,798. 

South East

House prices in south London tend to be lower than the north of the capital, especially in southeast London, where the sales market has struggled recently. The current average value is £497,999, which has seen a 6.07 per cent drop in the last 12 months. 

East 

East London is performing even worse than the south of the capital, with house pricing falling by nine per cent in the last 12 months. Property values currently sit at £447,764, which is a drop of £49,169. 

Sticking with buy-to-let

So what can sellers, and specifically landlords, do if they are thinking of selling their home? Those with an eye on the long-term market can benefit by holding onto their homes until there is more certainty on the London property scene. 

The Covid pandemic will pass, and property prices – along with demand – will rise again in a sustained manner. If you find yourself in a situation where your property receives regular rental income, the smart move could be to wait things out. 

The Office of National Statistics (ONS) data shows that rental prices are increasing marginally, despite Covid. That will offer landlords a crumb of comfort, but the real gains come in the form of continuing to receive sustained rental income while house prices begin to pick up again in the next 12 to 24 months. 

Maximising your property assets

With the private rental market set to grow to a quarter of the UK housing market in 2021, demand is only increasing. In the capital, that number is even higher, with 60 per cent of London residents set to account for private renters by 2025. 

That’s why many are choosing to stick, holding onto their assets and utilising high-quality property management to achieve a regular income stream and take care of their portfolio. Then, once the world resumes normality, the property market will be stronger after the changes accelerated by Covid.