South London is where I live, it’s where I’ve worked for many years and I am passionate about the property market, especially in this beautiful area of London. I strongly believe that the London property market will weather the storm and emerge from lockdown raring to go, the reason for that comes down to some fundamental facts.
Demand & Supply
The sales market in London is underpinned by a shortage of property and an ever-increasing population. At last count, there are roughly 3.56 million dwellings in London and a rising population of just under 9 million with very little remaining land on which to build new homes. As a result, there will always be an imbalance of demand vs supply.
In my view, one of the main reasons that the sales market goes through peaks and troughs is down to levels of sentiment and confidence. At any given time, there could be a multitude of external factors affecting people’s confidence to buy property.
We have seen this before. In 2008, the world experienced a global recession which resulted in higher than normal unemployment, restrictions in mortgage lending and consequently lower confidence in the London property market. During this period, as we know, many of the banks were bailed out, mortgage market liquidity eased and 2010 saw a resurgence of growth in the London property market. Why? Because the fundamentals never changed, the demand was still there. Waves of buyers who had planned to buy, yet held off between 2008 - 2010, flooded back into the marketplace once they felt confident enough to do so. There was ‘pent up’ demand.
More recently, the London market experienced a similar situation with the UK’s decision to exit the EU. Confidence levels were low as people felt uncertain about economic stability and what lay ahead. Consequently, many buyers pressed pause on their property search and waited until some level of certainty was confirmed.
In the brief period post Brexit, after the general election and prior to the global Covid-19 pandemic, we began to see a significant and rapid increase in market activity as ‘pent up’ demand had built once again. Competitive bidding, including many sealed bids, returned as flurries of interest arose quickly. I have no doubt in my mind that we would be in the midst of a very busy, active sales market and rising property prices had Covid-19 not emerged. Why? Because the fundamentals, again, have not changed and the demand remains. Public confidence grew again, and as a result we saw the market shift.
London is Resilient
Why do I think it is important to remember this? Well, because it would be very easy to believe in the midst of a global pandemic, that the market is not going to be buoyant again anytime soon. When you are in the eye of the storm it is very difficult to see out the other side of it, but we have seen in the past that London is resilient and will prevail again. There is no denying the ‘pent up’ demand which has built over a long period of uncertainty and then put on hold again due to the current lockdown. When a sense of normality returns to people’s lives, however that may look, I am certain that public confidence will return quicker than ever before, and the market in London will grow again.