Buyers have finally returned in force with home sales soaring unexpectedly this year, sending London’s housing market into a post pandemic rebound to rival the ‘Boris Bounce’ of 2020.
The number of transactions in January and February was 35 per cent higher than this time last year and 19 per cent higher, on average, than the same period across the three winters of 2017, 2018 and 2019, new data from Savills reveals.
This leap in activity is the first meaningful upturn in what has been, in the main, a nine-year slump in the capital’s home sales sector.
London is leading the national recovery, too. The number of sales across the country is up 30 per cent on last year (compared with 35 per cent in London) and nine per cent (versus 19 per cent) respectively.
Lucian Cook, head of residential research at Savills, points to the combination of (slightly) lower repayment rates following the mortgage market mayhem of the past 18 months, and a return to life pre-Covid.
“There has been an unwinding of pandemic trends and we’re seeing robust demand for an urban lifestyle close to transport links and work,” he says.
Buyer confidence has also been boosted by the expectation that the Bank of England will lower the base rate from 5.25 (bringing down mortgage costs) by the summer.
For Guy Gittins, chief executive of Foxtons, the start of 2024 resembles the ‘Boris Bounce’ of early 2020 when the market burst into life after the general election and on the promise that Brexit would get done. This flurry of activity was brought to an abrupt end just months later when the country went into lockdown and the property sector was closed.
“The number of new buyers registering with us is 12 per cent higher even than during the Boris Bounce and viewings are up by a third too,” he says.
The release of pent-up demand
Traditionally, the property market closes for Christmas and is quiet until the spring. This year, “it didn’t pause for breath”.
After 15 consecutive interest rate hikes and Liz Truss’s disastrous mini-Budget, when lenders and borrowers alike feared mortgage rates of six per cent, things have settled down.
“The mini-Budget decimated the property market and transaction levels were as bad as at the depths of the global financial crisis of 2008,” says Gittins. “It has taken time for people to become accustomed to these higher interest rates but now that the lenders are offering more competitive products those buyers who had put their move on hold are back.”
Cook describes it as a release of pent-up demand. His analysis shows the biggest uplift in sales activity is for homes costing less than £300,000 (typically studio flats) and family homes between £500,000 and £1 million.
“Lower mortgage rates and a more stable economic backdrop have started to unlock the moves that didn’t take place last year,” agrees Aneisha Beveridge, head of research at Hamptons International.
“First-time buyers and upsizers in particular are looking to make the move off the back of improved affordability. Sales agreed by us in February are up 10 per cent on 2019,” she adds.
Life after the nine-year slump
It is easy to see why sales are up on last year, the height of the mortgage market chaos. But why has there been such a rise versus the beginning of 2017, 2018 and 2019 when the base rate was at 0.75 per cent?
London had peaked by 2015 with house prices increasing about 20 per cent in 12 months. The combination of George Osborne’s punitive stamp duty overhaul and the uncertainty created by both Brexit and the 2019 general election put the capital’s homes sales market into paralysis, explains Gittins.
“A Corbyn-run Labour government is a very different proposition to the Labour offering today,” he says. That and Brexit unnerved certain buyer tribes: City workers, London’s European communities, overseas investors and relocators and the Bank of Mum and Dad funding first-time buyers.
The overheated London housing market had also entered the typical second half of the property cycle where people relocate to the commuter belt and other cities in search of better value for money. However, this slump was elongated by the exodus during the pandemic.
This has now reversed. A report from the Centre for Cities published last week shows London’s population fell by 75,000 during the pandemic but returned to its pre-pandemic peak in 2022, and is now well and truly above it.
In short: this is the much-delayed London recovery.
Where are the hotspots this spring?
Further research from Savills ranks those pockets of London with the biggest uplift in online search activity going into the spring selling season.
The volume of searches for properties in Teddington in Zone 6 was up 91 per cent, the biggest leap of any London village, between July 2023 and January 2024 compared with July 2022 and January 2023.
St John’s Wood, Northcote Road in Clapham, Covent Garden and Pimlico complete the top five, followed by Earlsfield, Shepherd’s Bush, De Beauvoir Town, Highbury and Holland Park. These represent different travel zones and demonstrates a range of buyers coming back into the market.
Rosy Khalastchy of Beauchamps Estates says US, Indian, British and Middle Eastern buyers are all vying for properties with outside space.
“Sales so far this year are already 80 per cent of the total sales for the whole of 2023,” she says. American buyers are also active in Covent Garden. “The strength of the dollar and the fact that prices here are 20 per cent lower than in 2015 means they are getting a significant discount,” explains Jonathan Fieldman of Knight Frank.
First-time buyers are out in force in the likes of Earlsfield and De Beauvoir Town, by the canal in Hackney.
A word of warning
House prices in the capital rose four per cent in 2021 in the race for space and only fell by two per cent more in 2023, according to Land Registry.
Plus, any softening of values has been wiped out by the increase in interest rates, meaning affordability is still stretched in London and the deposit requirements are still huge.
Changing Zones
Homes further afield
Forest Road, Walthamstow
One-third of these 90 new apartments have already sold off plan. There is a 20 per cent discount available for those eligible. The complex is opposite Lloyd Park and has two roof terraces where residents can tend the communal allotments.
⬤ From £298,000; pocketliving.com
The Venue, Hayes
Within the 18-acre redevelopment of the old EMI building is the Venue — built by Weston Homes. There are 181 homes situated around a podium garden with a discount market scheme available and £20,000 off household bills on offer, too.
⬤ From £250,000; weston-homes.com
Marlow Cottages, Teddington
A one-bedroom apartment in a converted Victorian terraced cottage is on sale via Inigo in leafy Teddington.
⬤ £425,000; inigo.com
Knowsley Road, Battersea
A Victorian three-bedroom family home with a kitchen that opens out onto the garden. Close to Clapham Junction railway hub, through John D Wood.
⬤ £1,150,000; johndwood.co.uk
There is little help from the Government following the end of the shared equity Help to Buy scheme and price falls are cushioned by a lack of supply.
While a housing market recovery and an increase in transactions has a positive contributing impact on the economy it also means further house price rises, making it harder for those without the Bank of Mum and Dad to become homeowners.
So how are buyers finding a way?
Boomerang buyers find a doer-upper
Jo Chrobak and her husband, Darius, sold their flat in Battersea and moved to the village of Caversham on the edge of Reading eight years ago.
“They say once you move out you never go back,” says Chrobak. But despite the river-side spot with bike routes and running paths, the couple desperately missed London. “We thought it was a dream come true but we quickly realised we missed London, the activities, the buzz, the transport, the people and our friends,” she explains.
Eventually, with their two-year-old daughter Julia to consider, and despite much higher interest rates, they put their house on the market with a fixed plan to move back to Wandsworth. “A bigger house with a garden was non-negotiable. We wanted to be near parks, great cafes and restaurants and in a tight-knit community,” Chrobak adds.
The couple, who run the Interior Designer’s Business School, bought a doer-upper through John D Wood — complete with paint peeling off the walls and holes in the plaster. But this was the most affordable way to re-access the London market.
They capitalised on the wave of people moving into the home counties and got the four-bedroom house just off Northcote Road for less than £1 million — a rare find in an expensive area.
“We have the best of both worlds, being in the middle of city but it’s as friendly as a little town,” she says.
From Zone 2 to Zone 6
Swapping zones is a well-trodden path. Charlie Helmich, co-founder of the lifestyle communications agency September Communications, owned a two-bedroom flat in Queens Park, Zone 2, with her husband, Greg.
They loved the area but could not afford to upsize there. Following friends, they rented in Teddington, Zone 6, and waited for the right property to come up — which it finally did just a few residential roads away from Bushy Park, for half the price than in Queen’s Park.
“We did talk about moving out of London,” Helmich says, “but I wanted a high street with a pulse and amenities that are walkable, and the Thames is on our doorstep.” She cites the 30-minute easy train journey into Waterloo, the Ofsted-rated outstanding schools and the friendly community.
The couple now live in a four-bedroom semi-detached house with their two children: four-year-old Casper and two-year-old Honor.
