There seems to be a fair bit of debate regarding the state of the property and real estate market during the 2020 pandemic. An urban exodus and relocation to rural areas have led to a record high in average UK 2020 house prices (4.7% increase by September), which in some respects would seem to predict a decline in London prices.
Yet, against all odds after few months of flatlining, London’s average house prices increased, hitting a record high of £496,000 in September 2020. Yet, comparatively, the growth rate of London prices in 2020 lagged behind the UK’s rising average house price, flatlining almost completely since March 2020 (at which point it had grown 4.5% in the past 12 months).
The unprecedented circumstances of 2020 have, on top of everything else, seemingly made the property market even more difficult to predict, sending mixed signals to property owners and investors alike. So, should you buy a London house in 2020 or should you wait until 2021?
House Prices Rise in London 2020
The latest estate agent chain housing market report predicted house prices in London to increase by another 2.5% between September and January. This stunning recovery after the havoc of springtime pandemic measures came as a result of pent-up demand and the bringing forward of moving dates for more people, as well as high-income individuals being less likely to have lost their jobs.
However, for this very reason, there will be more houses for sale in the capital. The increased competition, combined with fewer international buyers and the end of stamp duty holiday, will probably contribute to a 1% house price fall in 2021.
At most, London prices have stabilised for the first time in years. This means somewhat mitigated hopes for prospective first-time buyers hoping to get on the property ladder because even should prices fall, so too will income. For this reason, buyers with ready access to cash are more likely to be able to invest and not be too limited by tighter credit schemes.
COVID-19 Hits London Prime Property Market
Although the housing market has recovered better and more quickly than expected, a lack of buyers overseas, who make up the majority of those who buy London prime properties, has led to a decline in sales and rental prices in London’s most exclusive areas.
However, experts expect the country’s economic recovery to put London back on its long-term growth cycle, predicting a 1.5% overall increase in 2022 and a 3% increase in 2023.
Should I Buy A House In London Now Or Wait Until 2020?
The housing market has recovered from lockdown more quickly than expected, and house prices are still—broadly—likely to remain stable or continue growing (gently) in the next few months and years. Low growth is often short-lived.
If you are looking to buy into London’s most exclusive areas, 2020-2021 is possibly the best time to do so given the decline of attention from international buyers. Prices of prime properties in London are more stable or lower than they have been in years. Since this is likely to pick up again next year, sooner is always better to start looking. As the saying goes: “Be fearful when others are greedy and greedy when others are fearful.”
Even buyers looking to buy a house in 2020 or 2021 should not lose motivation: everyone is on starting blocks but there’s never any harm in looking. If you are a committed Londoner with a deposit ready to go and a secure job, you can take advantage of low-interest rates to get a good fixed-rate deal. There is no practical reason to delay.
A word of warning, however: a house purchase can take between six and eight weeks, but pandemic measures and checks will likely delay the buying process some more.