In the capital, a sustained rise in people registering to buy and a dramatic drop in the volume of new properties coming up for sale has caused the property market to bottom out.
According to Chestertons, one of London’s oldest and largest estate agencies, 35% more buyers registering since the start of the year compared to the same period in 2018. In addition, the number of agreed sales is up 7% annually and viewing appointments have increased 12% year-on-year over the same period, further demonstrating the current strong buyer demand in the market.
However, Chestertons reports that the number of new properties coming onto the market during this period in the capital is down 22% compared to 2018. This shortage of available properties for sale, combined with rising buyer demand, has acted to slow the rate that house prices have been falling in London.
The latest Land Registry data shows quarterly price growth in Greater London improved from -1.4% in December 2017 to -0.6% in December 2018. Meanwhile in Zone 1 London, Chestertons’ Index finds that in the three months to December 2018, prices in prime locations fell by 1.2%, a considerable improvement on the 2.2% drop recorded in the previous quarter.
With house prices having fallen significantly since 2014 and rents increasing in many areas of London due to a shortage of available rental properties, rental yields are also picking up and shoring up investor demand. Yields in the London locations covered by Chestertons stood at 3.2% at the end of December 2018 compared to 3.0% at the same point in 2017. In Zone 1 areas, yields rose to 2.8% by the end of December, up from 2.7% year-on-year.
Guy Gittins, managing director at Chestertons said, “Following two years of substantial price drops, the market is now bottoming out in London. Property values in the capital, particularly in prime locations have now come down to a level that is proving increasingly attractive to potential buyers, driving a huge surge in the number of people registering with agents and buying property since January.
“At the same time, the number of new properties being put up for sale has plummeted. This dramatic imbalance between supply and demand is starting to fuel small price increases in areas like Hyde Park and Putney as competition ramps up, and we’re even seeing instances of buyers attempting to ‘gazump’ others by offering to pay over asking price. The signs of recovery are there, with the prime market leading the way.
“It’s not just local buyers who are coming to the market in their droves now, but investors too, who are seeing improved yields and good opportunities. With the 29 March looming large in people’s minds, overseas buyers fear their window of opportunity is closing and are moving fast to invest in the London property market while prices are low and sterling is weak.”