What is the forecast for the London property market in 2022?

Much of the London property market has lagged behind the rest of the UK in recent months, but it remains a popular property investment option for many.

After many years of soaring house prices, the capital has experienced a major slowdown in recent times. While real estate values ​​remain among the highest in the country, the pace of growth has slowed – and even declined in parts of the city – and transaction levels have slowed relative to other places.

Over the coming year, most experts predict that the London property market will continue in the same vein, with slower growth rates than elsewhere. However, the property market across the country is expected to slow after last year’s frenzy, as the effects of the stamp duty suspension and pent-up demand due to Covid begin to wear off.

The rise in house prices will vary depending on the capital

A housing forecast of Savills divides the activity of the city’s real estate market into different sections. In central London, where high-end properties fetch the highest prices, the company expects 2022 to see a sharp 8% increase in house prices over the coming year.

However, London’s prime borough will see a much more modest 4% increase over the next 12 months. Yet with values ​​already in the multi-million pound region for many of these homes, this increase represents a significant sum of money.

In the traditional London real estate market, Savills predicts a rise of just 2% in house prices over the coming year. This is below the UK average of 3.5%, and significantly lower in the dominant North West, which could see average values ​​rise by 4.5%.

Zoopla’s latest forecast reflects the same forecast of a 2% increase in London over the coming year.

Is the London real estate market booming?

Despite the drawbacks of capital for real estate investors – including high house prices and lower rental yields – it remains an extremely popular investment location. As a major international city, it is at the center of constant regeneration and investment projects which ensure its continued economic importance.

On top of that, its state-of-the-art transportation system is also being extended, with Crossrail expanding the areas that real estate investors can target. The London rent is also very high, so some investors will find it outweighs the costs initially. The average rent in London in October 2021, according to Zoopla, was around £ 3,431 per month.

Craig Tonkin, Sales Manager at Bective Agents, said: “As we are now starting to see signs of a cooling of the market in parts of the UK, London is continuing its momentum.

“This has been driven by an influx of foreign interest into the high end of the market and in particular we are seeing large family houses shrinking at a rapid pace due to a severe supply shortage.

“With growing demand for housing in London, the capital is expected to experience a sustained level of house price growth throughout the year and into 2022.”

Five-year forecast shows regions to lead

From a property investment perspective, parts of the UK – particularly the North West, Yorkshire and the Humber and the Midlands, according to most of the data – tend to offer the best return options. House prices are lower, leaving more room for higher returns. These are also the areas that are expected to experience the strongest growth in house prices in the coming years, hence strong prospects for capital gains.

Rental demand is also high, and growing, in many major cities in the UK. Manchester, Birmingham, Liverpool and Leeds are all areas often targeted by those leaving London. They are also highly sought after by students, graduates and young professionals, with a lower cost of living combined with the attractiveness of the growing number of companies setting up shop in these regions.

Many property investors who have had success in the London property market in the past may be tempted to continue investing there. While there are certainly many promising locations that offer good buy-rent opportunities in the capital, it appears that a growing number of investors and homeowners are considering exploring more remote areas to get the most out of it. of their investments.