Are central London house prices still rising?

The surge in prime central London house prices and rents has been one of the most remarkable features of the capital’s post-pandemic recovery. Recent figures from the estate agency data platform LonRes show that year on year property prices have risen by 5% while rents have increased by an extraordinary 23.3%.

Why have we seen high house price rises in London?

During the pandemic, properties in the exclusive prime central London zone - a large area that includes some of the capital’s most affluent districts - suffered the biggest impact. Londoners tired of successive lockdowns moved out to the suburbs, or to commutable towns in the shires, in search of more space and a greener outlook.

But as pandemic restrictions lifted and the capital’s offices reopened, the Covid ‘exodus’ went into reverse, sparking renewed demand for houses in central London. Overseas buyers also began to return in droves, showing that at a time of increasing global insecurity, the London property market is still regarded as a safe investment.

Central London house prices see unexpected trends

Prime central London property trends have even occasionally exceeded expectations. A good example is the Stamp Duty Holiday, which was introduced to stimulate activity in the housing market during the pandemic. The tax discount proved so effective that property experts predicted a sharp downturn in sales when the holiday came to an end.

However, buyers continued to come forward, even as the discount tapered off and drew to a close. In July and August 2021 the number of new prospective buyers registering in London was 21% above the five-year average.

What does the future hold for central London property prices?

Property industry pundits have forecast growth of 7% for average house prices in central London this year. If this percentage is achieved, the capital’s prices will outstrip those in Paris and New York, and the prime London market will enjoy its best results in over five years.

Although the sun is currently shining on prime London property, we believe the market could experience slower growth over the next 18 months. Challenging global economic headwinds and an inflation-busting bank rate rise to 1.25% - affecting mortgage payments - may have a cooling effect on UK property sales.

Despite the changing economic outlook, we are still seeing considerable demand, largely driven by a shortage of available housing stock (this is particularly acute with regard to rental properties).

It is expected that continued high levels of demand, set against a lack of properties, should help the market to remain buoyant.

If you are looking for houses or apartments in central London, we would be delighted to help. We are an independent, family run estate agency with deep local knowledge and a personal, friendly approach.

Why not visit us in person or contact us at one of our offices in Westminster, London Bridge, Battersea or Kennington?