If you’re looking to invest in a property, major cities are a relatively safe option. That’s why many investors look at places such as London when buying a property. This is because large cities are booming with life and economic opportunities, which also means the same for the property market.
That said, the property market is always up and down. For investors, this means planning far ahead into the future. That way, dips and spikes in the market don’t come at you as a surprise.
So, what does the London market have to offer between 2023 and 2027?
There are many factors that can affect the property market, which is why it’s very hard to predict what’s going to happen next. In this article, we’ll take a look at trends and factors that can affect the market and see what experts have to say.
So, if you want to make a more informed decision about your existing properties and properties that you consider buying, keep on reading.
The UK Property Market as a Whole
To understand what the London market may have in store over the next few years, it’s best to look at the UK market as a whole. The London market may grow a bit faster or slower than the entire UK at times. However, the regional core is still largely dependent on what happens in the whole country.
The UK market, like the global property market, has been largely up and down in recent years. This is because of the pandemic and overall global economic instability, which has pushed the property markets up and down. While the start of the year had analysts predicting a “boom” for the market, recent instability has had more people predicting the opposite.
So, which of these predictions should you believe?
There’s no denying that we’re seeing high prices and strong headwinds right now. For most people this indicates a strong downturn for the market. That said, it isn’t as bad as it seems. While there will definitely be some trouble in the UK property market this year, that doesn’t mean we should expect and prepare for a complete doom scenario.
There are some reports that say that mortgage rates are between 4.49% and 4.69%. While you may be able to get deals at around 4.04%, these prices are still around 2% lower than the US. This indicates that the UK market may slow down and that it may not be as much of a boom as we might have thought post-pandemic, but it doesn’t mean that you should expect a doom scenario.
London Property Market Performance in 2022
When we look back at 2022, it’s evident that the London property market started to slow down towards the end of 2022 after a few years of constant growth that brought the average London home to £545,000.
What’s important to note is that during 2022, London and the UK as a whole was still very much going through and recovering from the pandemic and interest rates were low, hence the hike in property prices.
And because of that, many property investors are wondering if 2023 will be the same as 2022. So, if you’re one of those people, let’s take a look at what experts predict for the London property market in 2023.
What Do Experts Predict for the London Property Market in 2023?
There are way too many factors that affect the property market to be able to accurately predict what can happen in 2023. However, we’ve looked at what some of the experts in the field have to say after closely analysing the market and recent events. So, here’s what you might be able to expect from the London market in 2023.
Faster Growth as Economies Start to Recover
One of the predictions that many analysts have for the London market is relatively faster growth than expected. This is because economies are starting to recover from the economic damages that have come from the pandemic. Again, London prices are rising much faster than other regional cores, which is definitely a great sign.
A Positive Outlook for the Rental Market
Another factor you may want to keep in mind as an investor is that the rental market in London looks positive for 2023. There’s a high demand for rentals in London as more people move to the city to study and seek new economic opportunities.
Trends for the Next 5 Years That Can Impact London Property Prices
It’s already hard to predict what will happen in the property market over the next few months, so you can imagine how much harder it is to create a five year forecast. That said, here are some of the things we learned the experts believe will happen to the London market over the next few years.
Different Factors May Limit Price Growth
Over the past few years, many analysts have predicted large price growths for markets like London. That said, there are many factors right now that may limit that price growth over the next few years. For example, political, economic, and societal instabilities have a major effect on price and market growth.
Domestic Instability May Temper Market Growth
Another factor that may temper price growth from 2023-2027 is domestic instability. The UK political climate isn’t as stable as it should be. This instability has a direct effect on the property market and could have a negative impact on growth.
Changes in Interest Rates
The days of low interest rates are gone. Lenders now charge in times higher interest rates compared to a few years ago, which in turn makes loaning money to purchase a property not a smart financial decision. And because of that, the market is expected to slow down or at least maintain its current shape until interest rates start to drop again.
Despite all of that, according to Statista, the property market in London is expected to start recovering as early as 2024 and by 2027, it is expected to be back on track pre-pandemic.
There are many benefits to entering the London property market, especially during times when demand and property prices are unstable. This allows you to enter the market when property prices are low and benefit in the long run when prices start to stabalise and grow.
If you purchase a property today while the market is down, you can sell your property to cash house buyers or to the market as a whole for profit over the next 3-5 years.
