Is spring sparking green shoots in the London property market?

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TPFG

6 months ago - 19-03-2019

Spring always traditionally sparks the annual property sales spree in the UK.

And there appear to be some some green shoots sprouting in a London market hit hardest by the UK's current unstable political backdrop.

Asking prices rose in London in February, with the outer Transport for London zones showing small signs of sustained growth after another rise in March.

On top of that, buyer affordability is improving with wages outstripping inflation significantly and lenders offering up great mortgage rates as an incentive to get things moving.

Current UK economy

* The UK's economy grew by 0.2% in the three months to the end of January 2019
* Inflation fell to 1.8% in January - its lowest level for two years
* UK employment hit 75.8% in December 2018 - a record high
* Average wages rose by 3.4% in the three months to December - outpacing inflation significantly

So, what does all this mean for the London property market?

Certainly wage growth has improved buyer affordability and with lenders offering up some extremely attractive mortgage rates, first-time buyers with good deposits should find themselves in a sound position to buy if they are willing to look past the shaky political landscape.

Current London property market

Nationally, there were 101,170 transactions in the UK in January - 1.3% higher than the same time last year and the highest monthly total since November 2017 - an indication that many buyers could be slowly emerging from their Brexit-instigated slumber.

While much of a 3.4% monthly rise in prices of London properties coming to market in February, according to Rightmove, could be put down to the traditionally active spring and higher-priced properties in zones 1 and 2 being put up for sale, buyers will remain buoyed by Greater London asking prices which are now 3.8% down on a year ago.

Inner London prices rose by 5% between January and February thanks to those six-figure properties coming to market, but zones 2-6 also rose by 2.2% with those signs of growth potentially kick-starting sellers and increasing low London sales stock.

Rightmove's March House Price Index showed Greater London prices had fallen back slightly by 1.1% against those February figures, although property in zones 2-6 posted another monthly rise, up 0.7% on February.

Decision time for buyers and sellers

The decision for buyers is likely to be whether to take a medium to long-term view and buy now, or wait for more political stability once the UK's future outside the EU is clearer.

For sellers, increased buyer affordability could make now a good time to put up the For Sale board - as long as they are realistic on asking price given buyers appear to have the upper hand currently with homes costing less than 12 months ago.

Rightmove, meanwhile, reported search traffic on the portal was high, indicating pent-up buyers keeping an eye on market conditions until prices stabilise at a level they consider to be value.

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