House prices in London: strong start to 2021 despite lockdown as stamp duty holiday nears an end
London may be deep in lockdown but the housing market has still managed a strong start to the new year.
But it is the suburbs which have seen the biggest price surges, as buyers clamour for more space – inside and out – for their cash.
Where are house prices rising most?
Bexley, on the borders of Kent, and Richmond upon Thames, and Kingston upon Thames, in deepest south west London, have all seen price increases of just over seven per cent in the past year, to £433,659, £846,164 and £637,482 respectively.
London’s most affordable borough is Barking and Dagenham, with an average asking price of £328,830, up 5.4 per cent in the last 12 months.
In north London Jeremy Leaf, principal of Jeremy Leaf & Co estate agents, believes that post-lockdown buyers who have decamped from London will return.
“However, the desire for more outside space and accessibility to leisure facilities and even working from home will be permanent,” he said.
Tom Bill, head of UK residential research at Knight Frank, predicts that the popularity of suburban living will continue in the medium term at least – but he doubts central London will ever be a ghost town.
“The third lockdown will prolong the ‘escape to the suburbs’ trend,” he said. “Any long-term fundamental change is harder to assess but it clearly won’t reverse centuries of urbanisation. If the price is right, people will of course be tempted by all the benefits of living in London.”
Inner London house prices fall
Prices have certainly softened in central London already, particularly in areas which traditionally rely on wealthy overseas buyers investing in trophy houses and off-plan apartments.
Asking prices in Westminster are down almost six per cent in the past year, found Rightmove, but still stand at almost £1.4m. In Tower Hamlets prices are down 5.6 per cent to an average £565,163.
Islington, Hammersmith and Fulham, and Southwark, have also seen asking prices drop year-on-year.
Across the UK buyers have in the first half of January, with visits to Rightmove up by 33 per cent, enquiries to agents up 12 per cent, and the number of actual sales up nine per cent compared to January 2020.
And the number of homes sold during 2020 was up ten per cent compared to 2019.
The stamp duty holiday, announced last summer and with tax savings of up to £15,000 on offer, has certainly played a part in the current market activity.
However, many buyers are now stuck in a backlog of 613,000 properties awaiting legal completion, and Rightmove forecasts that around 100,000 households will miss out on the current stamp duty holiday which ends on March 31.
Most commentators believe the end of the stamp duty holiday will not equal a collapse in the housing market.
“Activity is being driven by reasons that are far more deep-seated than a cut in the transaction tax, which means any cliff-edge may actually prove to be less precipitous than feared, particularly if the vaccine programme advances at the current rate,” said Bill.
James Hyman, head of residential at Cluttons, agrees that demand will continue in the spring and summer – for property which is “sensibly and correctly priced”.
Dominic Agace, chief executive of Winkworth estate agents, thinks a successful vaccine rollout is key to the future prospects of the market.
“I don't think prices will drop post the stamp duty holiday in London. People registering now have already missed the deadline — and yet we are still seeing strong demand.”
“With a vaccine roll-out potentially ending the need for future lockdowns, I would see another major obstacle removed, encouraging more people to the market.
“I expect transaction levels to stay high as those moving out are replaced by the younger generation moving in, with many young professionals returning to London.”