House prices in London grew faster than usual just before the pandemic event put everything on hold. Property values were up from 2% in Feb’20 (ONS data). This growth was mostly attributed to London.
Despite the government plan of delivering 300 thousand homes in 2020, with an estimated demand for 340 000 houses, much less new homes will get to the market. This trend, in turn, will inevitably contribute to the housing price growth, like on any other market where demand grossly outstrips supply, what allows to view the sudden current drop in London sub-prime property prices as an opportunity. The fall in supply on the luxury segment will also boost rents in the prime sector. We expect this trend despite the drop of foreign students influx and slowdown of corporate lettings.
Another pandemic-driven behaviour change in the property market affects short-term lets. Landlords increasingly move away from Airbnb towards long-term letting contracts. Suburbs now meet more demand than central locations, especially properties with a well-tended garden.
In the previous recessions, prime properties recovered their value first, and this one will not be an exclusion. This segment is less dependent on mortgage deals and more by cash buys. Virtual viewings just made life a bit easier for property investors, although changed habits of property agents. A vivid example of the effectiveness of virtual viewings is a recent acquisition of a 5-bedroom house at Old Queen Street by a Russian billionaire from Benisti family for £15.45M.
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