London housing market update – February 2023

The close relationship between sales and rental sectors means that they can often affect each other in interesting ways. The creation of “accidental landlords” by a combination of falling prices and rising rental demand has become a noticeable trend in recent months.

Landlords ready to wait out the downturn

An average house price of £543,000 is convincing many in the Capital that renting is currently the better option. Rents in Prime London have increased by nearly 25% since the beginning of the pandemic, yet new lettings are up 10% from last February. As sluggish prices combine with rising rents, we are seeing yields approach an unprecedented 4%, so anyone who has ridden out the recent economic storm is now in a good position. This is definitely the case with our landlords who are based abroad and who happen to make up 70% of our clients. So, as a weak pound provides yet another incentive to invest, here’s what they should they look out for:

• The canal side views provided by Sheldon Square in Paddington are a big plus. Like Chelsea’s Imperial Wharf and Vauxhall’s Nine Elms, this is a development located on the fringes of Zone 1, yet there may be some flexibility regarding price.

• Landlords in Highgate are cashing in their period conversions in favour of more versatile properties. Investors who have the time and patience could consider buying here as they will be rewarded with superb hilltop views. The nearby enclave of Dartmouth Park is a popular alternative.

• Colindale continues to be a massive success story for overseas investors with 2 bed 2 bath apartments being the most sought after. Most purchasers intend to rent out and do not need mortgages purposes which has resulted in a profitable and fast-moving market.

Our international offices keep the momentum going

Our international offices continue to be our not-so-secret weapon. Promoting the Andermatt development in the Swiss Alps has been a joint marketing venture between our Hong Kong and Singapore teams and continues to attract plenty of investment. Not to be outdone, our Malaysia Sales team is pointing investors towards the Aspen Development in Canary Wharf and West Hampstead Central. All eleven of our international offices are selling homes in areas around the new Elizabeth Line which are growing in popularity as investment hotspots. Hayes Village, The Green Quarter Southall, and London Dock near Whitechapel are particularly popular.

London rents reflect a post-pandemic research boom

On the rental side, demand continues to easily outstrip supply. Pandemic research, immunology and other bio sciences are the new post-covid boom sectors and London is attracting the very best in these fields. Like their tech counterparts, these individuals are looking for high quality accommodation in places like:

• White City Living in the west and One Thames City in the southwest are popular developments among investors. The former is right next to Westfield Shopping City and the latter has brilliant riverside views.

• For those who are struggling to find a place to rent in Hampstead or Highgate, Mill Hill is a great North London alternative. New-builds like Barratt’s Millbrook Park have a Northern line Tube station, right on their doorstep.

• A less dogmatic approach to pricing is called for in Kensington and Knightsbridge. When this becomes a reality landlords can get the market moving again, especially as new builds on the fringes of the neighbourhood start to look like a better deal.

It pays to have access to expertise that can guide and assist through any sudden adjustments. Our Japan Desk anticipated the challenges that would arise when higher rents exceeded the rigid accommodation budgets of some of their clients. They were quick to offer alternatives that would be near to fast transport links and also within the spending remit of most Japanese relocation agents. If you want to know how we can help, please get in touch.