Price growth is likely to remain muted into 2024 at 0.0%,
with values only dropping 1.2% in the last year (Savills, 2023). With the majority Central London market free from relying on debt the interest rates have a reduced effect; this pause in growth is the result of uncertainty. But looking at the bigger picture, the London housing market has performed remarkably, with the UK market predicted to drop 4.7% in 2024 (OBR, 2023).
Beauchamp estates shows a predicted cumulative growth
continuing to look past 2024, Beauchamp Estates shows a predicted cumulative growth of 10.8% by 2027, which is almost three times that of the national forecast at 3.8%.
A Buyers Market
CEO of Invest8, Freddie Toomer, discussed the benefits of these fluctuations for investors: “This projected price drop, coupled with a longer recovery period, signals a shift towards a buyer's market. Prospective buyers will have increased leverage, more choices, and potentially better financial deals, making it an opportune time for property investments in London.”
The rental market further offers support
with Chesterton’s forecasting a 5% increase in Prime Central London. When combined with the predicted reduction in interest rates, the market offers favourable conditions to investors looking to purchase assets with the intention of adding value to hold on until the predicted bounce back in 2027.
London remains the leader in foreign direct investment
attracting 779 projects totalling over £2 billion - well clear of Dubai (592), Singapore (586), New York (424), and Paris (332) (City of London Corporation, 2023).
The biggest concern we have observed at Landmass in our discussions with agents and investors is the divide between sellers' desired pricing and the prices buyers are prepared to pay. When building an appraisal for a development, agents and sellers often believe developers constantly lowball offers to abuse the power of uncertain market conditions. Yet, the margins don’t provide us with even a slither of freedom to negotiate.
With build costs still massively inflated, having risen 43% in two years (Knight Frank, 2023). The margins are so tight that many offers are way off the proposed sale price. With no outlook as to when these costs will fall, developers have to be more creative to squeeze out the necessary profits.
Get in touch with our team to learn how our insights & experience can support your next project.
