London Residential – Q2 2021
The combination of the stamp duty holiday and vaccine roll-out success gave rise to record breaking transaction levels in March 2021. This spilled over into Q2, with Nationwide recording the highest outturn in annual house price growth in June since November 2004.
This activity was bolstered by pent up demand and an increase in savings during the pandemic. It is worth noting that the number of mortgage approvals in the UK was up fivefold in April 2021 when compared to April 2020. Prime Outer London (POL) in particular, where there is a higher proportion of domestic buyers as part of the drive for more space and greenery, saw transactions reach their highest level since March 2016.
There are also signs that the decline in rental values across the board is bottoming out, with demand growing faster than supply for the first time since the start of the pandemic.
While the surge in momentum is unlikely to continue at the same pace, forward looking indicators suggest that transactional activity will be sustained in the near term, with POL and UK Regional house prices expected to grow by between 4-5% in 2021.
However, continued uncertainty around the relaxation of international travel restrictions as well as the introduction of a 2% surcharge for foreign buyers means growth forecasts for Prime Central London remain conservative at c.2%.