Is Now a Good Time to Buy a Property in London?
When it comes to property, timing is everything – and if you’ve been looking to purchase your next home in the capital of the UK, you’re in luck. Whether you’ve spent the last lockdown saving or have been gifted some money for a deposit from your family, the increased emphasis on a better quality of life while working from home – and the stamp dirty holiday – has led to an increase in the number of people looking to buy their first home or invest in a bigger property in London.
At the moment, there are lots of people who are making big life decisions regarding where they live due to the effect of the national COVID19 lockdowns on their personal lives. And if the scenes at Victoria Station just before Christmas 2020 are anything to go by, it’s clear to see how many people are no longer happy living in London during a pandemic and may be considering upsizing, looking for a home with more outdoor space, or looking to get out of the city centre. As a result, there is a healthier level of properties available than usual – and with prices over 1% lower compared to this time last year, it’s no surprise that experts are urging those looking to purchase a home in London to start looking now.
Should I Buy a Flat in London Now?
Whether or not you should buy a flat in London right now will depend on your personal circumstances. Consider a range of factors – if you have a deposit ready to put down, you are enjoying secure employment, and you know that you want to live in London regardless of what the pandemic might throw at us this year, there is no practical reason to put off purchasing a flat in London, and it is a good time to consider taking advantage of the current market.
If you are in a position to buy, it is definitely worth starting your property search to see if there are any suitable properties for you that are currently on the market. However, don’t rush to take advantage of the falling house prices in London – bear in mind that homebuyers in any area should always take their time and do a lot of research to ensure that they do not end up overpaying. The good news is that there are lots of identical properties in London, and even if you don’t end up with the keys to the one that you like, finding a similar one for sale should be easier than ever this year with more and more people moving away from the capital.
With Prices Falling, Should I Buy a Property in London Now?
House prices might have fallen over the past few years due to the result of the EU referendum, the COVID19 pandemic, and the UK’s exit from the EU at the beginning of this year. However, most experts agree that house prices in London are more likely to gradually increase over the next few years rather than fall further. According to Knight Frank, London prices are likely to grow by 15% by 2024. As a result, a property that might cost you £400,000 today could potentially be worth £50-60k more by this time.
Will Brexit lead to a property market crash in London? It’s a question that nobody is quite sure of the answer to just yet, even though the UK has officially exited the European Union. While there are some rumours of bills and basic living costs rising as a result, this has yet to come to fruition. If serious economic disruption occurs in the future as a result of Brexit, experts warn that this would result in a drastic, immediate short-term slowdown, but may fall short of being a long-term property market crash. In addition, the third COVID19 lockdown followed by uncertainty about the furlough scheme’s potential end this year means that buyers need to be ready for an uncertain future.
Another reason why an increasing number of people are rushing to purchase London property right now is the stamp duty holiday, which is set to be in place until March this year. But while you may be able to save up to £15,000 on the overall costs of purchasing a London flat or house, property experts suggest that it may not always be worth falling for it. Due to the stamp duty holiday, the London market is doing well – but once it ends, property prices are likely to fall back, meaning that you’re more likely to secure a property for a lower asking price and your money will go further. However, others suggest that if you are in a position to do so, using your stamp duty savings to increase your deposit will provide you with more buying power when it comes to investing in a London home, allowing you to push yourself another step up the property ladder by investing in a larger property or purchasing a property in a more desirable area.
While mortgage rates are currency low, experts advise that mortgages are harder to secure right now if you have a deposit that is less than 15-20% of the property’s asking price. However, they believe that the cheaper mortgages are going to stick around for a while, and the scenario may improve even further for buyers with transactions set to slow at the end of the stamp duty holiday, which is likely to see higher loan-to-value mortgages returning with lower interest rates still in place.
Should I Buy a Property in London in 2021?
While working from home is certainly encouraging a lot of home buyers to look beyond the capital for their next property investment and you can certainly get more for your money while buying outside of London, property investment experts believe that the capital is always going to be the best investment for property in the long-term. Over time, it is an undeniable fact that house prices in London have always outperformed the rest of the UK regardless of the situation, and when the country – and the rest of the world – eventually returns to normal, London will still be a very desirable area with excellent public transport, brilliant infrastructure, and some of the best employment opportunities in the UK along with being an all-round great place to live.
Uncertain Times: Should I Buy Property in London Now?
While the housing market ground to a halt earlier in 2020 when the first national lockdown was introduced, it was quickly followed by a boom in the property market when everybody rushed to get back to normal once the restrictions were lifted.
The end of the first lockdown saw many people eager to find a more suitable home after spending several weeks in a flat or smaller property with no outdoor space or suitable home office area and considering there have been two further lockdowns and Tier restrictions since then, most probably had the right idea.
The boom in the property market has continued since then due to the same happening again after the end of the lockdown in November – and is likely going to reoccur as a result of the current lockdown, along with buyers looking to take advantage of the stamp duty holiday before it ends in March. After the first lockdown, Rightmove reported its busiest month for sales in a decade, and homes were selling quicker than ever with Zoopla reporting that three-bedroom homes in the UK were selling in an average of just 27 days.
However, the times ahead are still uncertain and while London property prices are expected to gradually rise eventually, there is no guarantee that they will not drop further first, especially after the stamp duty holiday comes to an end.
Whether or not you should purchase property in London now really depends on your personal situation, especially if you are a first-time buyer who will not be affected by the stamp duty holiday. Since there is currently a lot of competition that is driving up prices, first-time buyers may be wise to hold off investing in London property until April of this year when there is likely to be less competition.
It is also worth bearing in mind that due to the current COVID19 situation, you may struggle more than usual to get a mortgage if you are furloughed or self-employed. If this applies to you and you are considering purchasing a property in London, it is worth speaking to a mortgage broker who can help you explore your options, navigate the system, and determine whether or not it is something that is affordable for you right now. In unusually uncertain times, it’s also crucial for homebuyers to make sure that they have a plan in place for affording their chosen mortgage.
While house prices in the capital have dropped over the past few years making it an attractive market for buyers, it may be worth holding off a few months before purchasing a property in London in some situations since the competition is currently unusually high.