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NEWS: Investing in London Property | Is Now a Good Time?
London’s once red-hot property market has cooled significantly in recent years, leaving investors wondering whether now is the right time to buy.
The latest data suggests a mixed picture: while house price growth has slowed and profits for sellers have halved since 2016, upcoming shifts in mortgage rates, stamp duty changes, and renewed demand may set the stage for a more positive outlook in 2025.
Back in 2016, London homeowners could expect to double their money when selling, with average gains of 100% on their purchase price. But by 2024, profits had plummeted to just 44% on average, equivalent to £172,400, according to data from Hamptons. This marks the lowest level of returns since at least 2015, with some sellers in inner London even offloading properties at a loss. In Tower Hamlets, for example, 28% of sellers sold for less than they originally paid.
Several factors have contributed to London’s softer market. High transaction costs and weak price growth have discouraged homeowners from moving, with just 25% of London sellers in 2024 having bought and sold within five years. This trend is exacerbated by a wider economic slowdown and a mass exodus from the capital, with 860,000 people leaving London in 2023 for more affordable locations.
Investing in London Property - Will Prices Rise Again?
Despite the slowdown, property experts predict a rebound. Hamptons forecasts a 3% price increase across Britain in 2025, with London outpacing the rest of the country at 4% - the first time the capital has led the market since 2015. Rightmove has reported an increase in buyer demand since the start of the year, and as mortgage rates ease, affordability constraints may also begin to lift.
Government policies are likely to influence the market’s trajectory. Currently, first-time buyers pay no stamp duty on properties up to £425,000, but from 1st April, this threshold will drop to £300,000. This change has already triggered a rush among buyers hoping to complete purchases before the deadline. Additionally, new regulations targeting landlords - including restrictions on rent increases and a potential ban on ‘no-fault’ evictions - may discourage investment in the rental sector.
London’s rental market remains strong but is beginning to cool. In 2024, rental price growth slowed to 2%, and demand per rental property has dropped from 19 to 11 enquiries on average. Nonetheless, rents are expected to rise by 3% in 2025, particularly as city-centre living becomes more desirable again post-pandemic.
For investors, the decision depends on priorities and risk tolerance. House prices in London may be at their lowest point, offering opportunities for long-term growth. However, affordability constraints, new landlord regulations, and limited economic growth pose additional challenges.
It's possible that mortgage rates will continue to drop, and demand is likely to increase, so those willing to enter the market now could benefit from increasing house values in the future. But for those seeking quick profits, London’s housing market isn't necessarily the surefire bet it once was.
Interested in Buying Property in London?
London is renowned as a great place to live, but like any coveted spot, buying a home here can be competitive and the house prices reflect this. Whether you're settling down or looking to expand your investment portfolio, it'll help to ensure you're getting the best deal, as this will help boost your mortgage affordability. An experienced mortgage broker can use their network to match you with the most suitable lender and get you access to the best deal for your circumstances.
This will be especially helpful if you're buying from abroad, as a specialist mortgage broker will be able to iron out any issues that may pop up as a result of your overseas residence. At Clifton Private Finance, we have long-standing relationships with high street, private and specialist lenders, and we'll always work on your behalf to get you the most favourable rate for your unique situation.
If you're looking for high-end property finance or you have a complex income structure, we could get you access to tailored finance with private lenders.
To see what we can do for you, give us a call at 0117 205 4827 or book a free consultation below.
