London
London Property Investment
The London property market is one of the most international markets in the world. Investors from all over the globe have acquired real estate assets in the UK capital over the past 20 years.
During that time, it has delivered staggering property price growth and subsequently a strong return on investment.
- Some of the highest long-term growth of any property market
- New buyer registrations have recently doubled
London real estate investment highlights
We’ve helped 100s of investors acquire £100s of millions worth of London real estate.
We are extensively familiar with the market and top-tier developers operating within the UK city.
Here, we provide a brief overview of the London real estate market, including:
Past performance of London real estate
Future forecasts for London property investments
Assets and London investment locations
Essential investment information
Historic London property performance
There’s always been a lot of talk about the London property price bubble bursting. First, we have to address whether there is a bubble at all.
The reason the market is often described as a bubble is that the house price growth in London has far outstripped the national average in the UK over the past 25 years.
Unlike other UK markets which produce consistent and high yields such as Manchester and Birmingham, London is a market more reliant on heavy capital appreciation – and it has delivered.
Back in 2000, the average price of a property in London was around £200,000. Bear in mind the 25-year period between then and now has included the global financial crisis and a pandemic, that £200,000 property would now be worth around £550,000 – nearly tripling the value of your investment. For context, equities in the FTSE 100 have produced about one-tenth the level of ROI.
Last year, represented an all-time high for London real estate. The volume of offers accepted reached the highest level since the 2008 financial crisis with agents recording a 116% rise in demand. New buyer registrations also doubled in the period.
Ultimately it meant that investors could reasonably expect a 5-7% year-over-year rise in the value of their London property assets.
Forecast:
Is the London property bubble going to burst?
Q3 of 2022 introduced a lot of turbulence to the macroeconomic environment in the UK. Westminster saw 3 separate prime ministers and 3 separate chancellors. The pound fell and the base rate of interest rose, and yet the value of London property has so far been unaffected.
Data so far has revealed a 2% increase in demand on the previous year and a 7% increase in the average asking price.
Tellingly, if any investors are looking for signs of the bubble bursting, agents have so far reduced the price of 31% of their London listings – a figure lower than both of the previous 2 years.
One factor that may have an impact on the London market is mortgage rates. Following a Q3 mini-budget, lenders in the UK have lifted mortgage rates from around 3% to 6%.
This will impact the lower end of the market, particularly affecting first-time buyers.
One prominent market forecast has predicted a slight slowdown in the coming months with annual growth dipping from 5.5% to 5%.
That said, all the leading commentators are using the term price “correction” and not expecting anything more severe.
Assets and London investment locations
It is important to remember that the London property market is one of the largest real estate markets in the world. It is vast. It is fragmented. Top-level figures and forecasts can be misleading and investors will find significant variations and opportunities across a number of submarkets in the UK capital.
Last year for instance, while the London average property price growth was 7%, some boroughs actually recorded growth of up to 12.5%.
London submarkets
- Kensington & Chelsea: Demand for prime London properties has increased almost 50% in the past 12 months. Almost half of buyers are also cash purchasers, meaning their spending power will be unaffected by the recent rise in mortgage rates.
- The City of London: Apartments and penthouses in the financial district have some of the lowest turnover of properties in the UK. Any new properties in this location will reap the benefits of high demand and very low supply.
- North London: Some of London's strongest performing postcodes can be found here, with some small hotspots achieving 14.5% growth last year.
Overseas and cash investors
Much of the above market overview is informed and based on residential purchases. Investors looking to acquire in London may be playing by a different set of rules over the next 12 months – it could be a very compelling time to buy.
First of all, if London real estate markets are to correct, investors will have an opportunity to buy at lower values than they have held over the last year. Especially if purchasing in cash.
Secondly, overseas investors buying in dollar-based currencies have seen their buying power increase by 10% over the last few months.
Finally, the UK currently has a stamp duty holiday, meaning investors’ total outlay on purchases could be dramatically reduced by tens of thousands of pounds in the coming months.
Find London properties
The Property Selection brings together an exclusively handpicked selection of some of the best real estate investments in London and around the world.