London Property Prices Predicted to Rise as Capital Reopens

One of the surprising outcomes of the pandemic has been the property boom, with many market forecasters tearing up their predictions for house prices for this year. Despite a number of lockdowns and the end of the furlough scheme looming – which may well bring job losses with it – some of the big estate agents have revised their forecasts upwards, following a storming performance for the market in 2020 when prices rose by 7.3 per cent.

The stamp duty holiday, which was recently extended by the Chancellor of the Exchequer in the Budget, is helping propel interest, transactions and subsequently values, as buyers attempt to take advantage of the saving. It has now been extended until September, having previously been earmarked to end this month, and those searching for more space as a result of living with lockdown are keen to complete in time in order to save thousands of pounds.

Confidence in the market is high with the successful rollout of the vaccination programme and government support for housing and jobs, combined with record low interest rates and cheap mortgage deals.

Estate agent Savills predicts a 4 per cent rise in property prices this year, having previously forecast that prices would remain flat with 0 per cent growth. Meanwhile, another estate agency, Knight Frank, has raised its forecast from 0 per cent to 5 per cent for 2021.

London, which has lagged the country as many have left the capital for greener and cheaper pastures, is also expected to see values rise. While they are not expected to perform as well as the country in the short term, Knight Frank still expects prices in Greater London to rise by 4 per cent this year. Savills predicts house prices will rise by 12.6 per cent in London over the next five years compared with 21.1 per cent in the UK as a whole, as restaurants, bars, theatres and workplaces re-open and the lure of living in the capital returns.
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