London has one of the most attractive housing markets in the world. As one of the world’s most famous cities and biggest financial hubs, London is full of promising opportunities and a unique way of life. This is why many people are looking to purchase a property in London and move to the big city.
But as you might expect, property prices in London are really high. Property prices anywhere in London are actually just under twice as expensive as anywhere else in the country, and that’s largely due to the ever increasing demand and short supply for properties. Large institutional investors from all over the world looking to pick up investment properties in the city also don’t help the skyrocketing property market in London.
The staggering growth in property prices all over London have made it impossible for many first-time buyers to secure their first property. And that’s why many are now wondering – will London house prices fall?
In this article, we’re looking at all the data and evidence that suggests whether or not London house prices will fall soon. That way, you get an accurate view of the market, making it much easier to make educated and informed decisions about buying a property in London in the near future.
A Look at the London Housing Market
London’s housing market is unique from the rest of the UK. As the capital, London has a massive population of over 9 million people and unique qualities that separate it from other UK housing markets. This is part of the reason prices in London’s housing market are typically 50% higher than comparable properties in other cities such as Manchester.
The average price of London houses is one of the main qualities that people focus on when discussing the market. This is because everyone knows that the capital can offer scenic views, green spaces, a great quality of life, and most importantly, endless opportunities for developing your career. But with all these benefits also come high property prices, which is something you have to expect when entering London’s property market.
Over the last year, house prices in London grew to an average of around £553,000. This is almost double the average house price in the UK, which is currently cruising at about £295,000.
So, if you’re entering the housing market any time soon, you should expect to fork out a very decent chunk of money for an average home. On top of that, since London is such an attractive city, there’s also a lot of competition. And if you want to succeed in the market, you need to act fast.
But while prices in London can be much higher than the rest of the UK, there are also many great investment opportunities available. That’s why if you enter the market as informed as possible and have the right network, you might find a lot of success.
Lastly, make sure to note that prices for properties can vary depending on the exact location. And if you’re looking to live in London without paying the high property prices, you might want to consider properties in the Great London Area. Typically, the further away you are from the city centre, the lower the average property price will be.
Factors That Affect London House Prices
Before we discuss whether or not London house prices will fall soon, it’s best to look at some of the factors that can affect housing prices. These factors affect the prices of any market, so even if you aren’t investing in London, it’s important to understand these factors so you can make the most informed decision.
Inflation
One of the biggest factors that affect property prices is inflation. The way the economy performs overall determines the state of house prices in London and around the world. And since inflation is still fairly high in the UK, it’s no surprise that we’ve seen such a staggering rise in property prices in a major city like London.
Increasing Population
As more and more people look at either buying a property to live in or have as an investment in London, the prices are naturally going to increase more and more over time. This is because demand is steadily increasing while the supply for properties isn’t following as there is simply no more room for new homes.
Average Income
Another factor that plays a big role in housing prices is the average income of a person in the area. The more the average person earns, the higher the average rent and property price will be. And since the average income in London is higher than other UK areas, property prices are higher as a result.
How Did the London Property Market Perform in 2022?
The London property market performed exceptionally well in 2022, rising by an average of 6.7% since the year prior. The rise in property prices has made investors a lot of money, and in contrast, it has made entering the market for first-time buyers even more difficult. As far as renting is concerned, due to the increasing demand for properties, rental prices have increased by 14.3% compared to 2021, which is more than anywhere else in the UK.
That said, the growth of the property market across London was the slowest compared to other major cities in the UK. And as far as renting is concerned, while some places saw a massive hike, places like central London didn’t really see any increase or decrease in rental prices during 2022.
What Do Experts Predict for the London Property Market in 2023?
In 2023, experts predict that this is the year where the markets will finally stabalise after a turbulent couple of years. Some data even shows that prices across London are starting to fall, which is always likely when the market is correcting after the massive boom in prices that it saw between 2020 and 2022.
Experts believe that 2023 will be a year for thought and long-term planning, as properties will likely continue to climb over the coming decade. So, if you plan on purchasing a property, you can either jump right in, or hold off for a few months to see where the markets are heading.
Conclusion
Though some data shows that the London property market is correcting, there is no hard evidence to tell whether or not house prices will see a major dip. Experts believe that house prices may drop, but the drop isn’t going to be as significant as one might believe after such a hike in property prices over the last few years.
If you plan on buying a house in London as an investment, now is a great time. And since the market is always very hot for worthy properties, finding cash house buyers when you look to pull out from the market in the future won’t be an issue at all.
