The Intermediary – February 2025 - Flipbook - Page 21
RESIDENTIAL
Opinion
The fundamentals
in London’s midmarket are strong
T
he mood of the housing
market going into
2025 has shied from
“trepidation to cautious
optimism.” So said
Aneisha Berveridge,
head of research at Hamptons, who
is also of the view that that this year
could mark the beginning of a “new
housing cycle when London starts to
outperform the rest of the country.”
The start of 2025 has brought
reasons to be cheerful about the next
12 months, but has also exposed a
degree of uncertainty on the broader
economic outlook.
The December 2024 Royal
Institution of Chartered Surveyors
(RICS) Residential Market Survey
points to the slightly brighter picture
seen over recent months remaining in
place, with most surveyors reporting
‘modestly positive’ expectations.
The volume of agreed sales
improved slightly over the month,
evidenced by the net balance moving
to +7% from a reading of +1% in
November, according to RICS.
Near-term sales expectations are
mildly positive, albeit the latest net
balance of +16% has been scaled back
from readings of +19% and +29%
submied over the two months prior.
A net balance of +37% of contributors
foresee sales activity rising over the
coming year, broadly in line with the
previous three months.
Tim Bannister, property expert at
Rightmove, is also upbeat, saying he
expects “higher price growth and more
transactions” in the coming year.
The number of available properties
per estate agent is at a decade-high
for this time of year, and Rightmove
recorded its busiest Boxing Day for
new seller activity, with a record
number of properties listed for sale by
estate agents.
It is worth sounding a degree of
caution as Stamp Duty increases,
potentially fewer rate cuts from the
Bank of England than previously
expected for the year, and increasing
taxes are all looming on the horizon.
London locals
The implications for London, as
ever, vary considerably depending
on borough and local dynamics.
The average house price in London
in October last year was £519,579,
according to the Office for National
Statistics (ONS), and while property
values fell by 1.4% month-on-month,
they are still 0.2% higher when
compared with the previous year.
While an average price can give a
general sense of the market’s health,
it doesn’t tell the full story. London
is a cluster of micro-markets all with
different values and levels of demand.
In Kensington and Chelsea, the
most expensive borough in the capital,
Rightmove data showed the average
asking price in December last year was
£1,650,916 – a 1% monthly fall and an
annual drop of 3.7%.
Even this doesn’t give a holistic
picture. The buyer profile and demand
for super prime stock – mainly in
Central London, Knightsbridge,
Mayfair and Chelsea – is affected by,
more oen than not, international
demographic, geopolitical and
economic trends.
Savills expects prime Central
London values to fall by 4% on average
in 2025, and the mood to remain
challenging while the market adapts
to the abolition of ‘non-dom’ status
and a 5% Stamp Duty surcharge on
second homes.
Compare that to buyers moving
in prime residential areas slightly
further out, such as Hampstead, South
Kensington, Richmond or St John’s
ROBIN JOHNSON
is MD at KFH
Professional Services
Wood, and the drivers are usually
quite different. Pay and bonuses,
proximity to the best schools, and easy
transport links to the City or West End
are more likely to maer.
The tide is changing on the work
from home culture, with an increase
in the number of companies looking
to get their employees back in the
office five days a week, meaning rather
than the exodus we saw in the early
pandemic, there will be demand from
a new influx of buyers.
Activity in Zone 3 and out is likely
to be reasonably robust this year – the
majority of those coming off very
low fixed rates have taken the hit and
continue to make payments. Stamp
Duty increases will mostly not affect
them, and there may be a material
bump in transactions as parents
move to areas with good state schools
following VAT on private school fees
coming in this month.
To some extent we’ve already seen
this. Rightmove’s London trend
analysis showed the average price
in Merton in December 2024 was
£752,890, a monthly increase of 1.2%
and an annual rise of 8.4%.
It’s no coincidence that Merton, a
leafy borough in South London, has
just been named as one of the best
places to live and retire in the UK, due
to its low crime rate, natural areas and
convenient transport links.
How the Government’s tax and
spend policies play out over the
coming months, and particularly how
the bond markets respond, will have
a bearing on activity this year. But the
market fundamentals are strong, and
we expect a relatively good year. ●
February 2025 | The Intermediary
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