The London Property Market Post Lockdown
How has Covid -19 affected the London rental market?
The very top of the market saw activity as applicants sought out luxurious and spacious accommodation to reside in during lockdown.
The middle to upper middle level of the market where one bedroom apartments would normally let for £1,950pcm and two bedroom apartments would achieve £2,600 pcm, has seen some stagnation with landlords having to accept offers approximately 7% -10% below asking price. I do have some concerns about this price point, particularly in light of the scheduled imminent completions in Canary Wharf Group’s Park Drive and Galliard Homes’ Maine Tower. However, a well presented apartment with sensible asking price will be sure to find a tenant fast.
Unsurprisingly, the more accessibly priced apartments have been most resilient in terms of value.
As always, location is key. Throughout the lockdown period, we continued to receive daily enquiries for a one bedroom flat up to £1,500 pcm or a two bedroom flat up to £1,800 pcm in good locations. Price drops were minimal in this price range. As we slowly emerge from lockdown, I expect demand could quickly outstrip supply.
How has Covid -19 affected the London sales market?
From the 24th of March to the 13th of May the sales market was effectively suspended. Although it was possible to organise video viewings and some conveyancers were still working, there were not any surveyors available to value the property on behalf of the buyer and the lender. So although in theory a sale could be agreed, it was not possible to arrange mortgage funds.
Sales enquirers during April were very low indeed – averaging 0.7 per day one a day.
Many surveyors have now returned to work, so hopefully we will start to see some activity in the sales market.
It is too early to tell how quickly the sales market will return to the positive signs we saw in February and early March, however, the fundamental market drivers are still encouraging, i.e low interest rates and a lack of housing supply.
What can we expect in the near term?
Parallels have been drawn between the economic impact of the current COVID-19 pandemic effects and the financial crash of 2007/2008. There are, however, some key differences between the two periods in relation to the property markets. In the 2007/2008 global financial crash, insufficiently capitalized banks were part of the problem. Following the better regulation of the financial system financial institutions have had to undergo stress testing and financial modelling in order to be able to better cope with an economic downturn. Therefore, the banks have healthy balance sheets and will be able to provide the funding needed to drive the economy and the housing market.
As we emerge from the lock down and renters and purchasers work to realise their aspirations, we expect the finances to be available to them.
Therefore, I am confident that transaction levels in both the rental and sales markets will recover quickly.