One of the world’s leading financial centres and the UK’s capital city, London is also home to internationally renowned universities, cultural events and fast-growing fintech and technology sectors. Already well connected, London is set to become even more accessible thanks to some of the largest infrastructure projects in Europe.
London’s housing market experienced a very strong and rapid recovery from the Global Financial Crisis. Subsequent to the downturn in 2009, London’s house prices surpassed their pre-crisis level by early 2012.
This robust growth was driven by the improving global and economic environment, which attracted overseas investors back to London. In addition, the mortgage market became increasingly competitive with lower interest rates, which drove demand from the local population.
The strong recovery means that average property prices are now among the highest of our global cities at $647,000. At almost $1,700psf, London has the third highest prime property values, behind Hong Kong and Sydney.
London also has a large and growing rental population, with private renters currently making up 28% of the city’s households. A combination of high demand and low stock has pushed rents to the fifth highest in our global city ranking and the average monthly rent in the city is now just under $2,400.
Prices are due to be boosted still further by Crossrail (now called the Elizabeth line) especially in previously underserved areas where new stations are being constructed. The Elizabeth Line will transect London from east to west and greatly improve the connectivity of many districts while reducing journey times significantly.
However, a combination of strong past growth, high prices and UK mortgage regulation is now impacting the market. Sales volumes have gradually declined and house price growth has slowed to just 1% in the last year.
Despite that, London’s economy is predicted to remain strong. House prices are likely to continue to rise, albeit at a slower pace compared with recent years.