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    Home > News > London – What is happening to house prices?

    London – What is happening to house prices?

    Tuesday, March 16, 2021

    According to the office of National Statistics property prices in London rose 2.3 percent in February, part of a reaction to a strong conservative government being given a mandate to run the country after four years of Brexit woes.

    Then came COVID-19. The property market pretty much shut down for two whole months.

    Last week social distancing measures were relaxed and there was a sudden flurry of activity. Viewings and enquiries shot up. On Rightmove enquires rose 32 percent on their website.

    Massive activity, a lot of people looking, but what is actually happening to prices?

    Knight Frank are not predicting any sort of crash and as the market stabilises over the next couple of months, they look to seeing 8% growth in 2021. The key to what will happen steers us back to fundamentals. These fundamentals drove the “Boris bounce” in the market in the early Spring. This was stopped dead by Coronavirus but now with interest rates at close to zero, a low pound and banks still very willing to lend we have the basic factors that will drive the market upwards.

    London property now looks like a very safe asset in a world where there has to be a counterbalance to the printing of money. There is no longer any gold standard to protect currency value. Rishi Sunak is just printing money like we have never seen. Just the cost of “furlough” is the same as that of the whole National Health Budget. To pull out of COVID-19 he has little choice but to print even more money. Taxing his way out of it cannot work as the numbers are too large and the emphasis will be to stimulate business, not to shrink it with tax loads.

    The effect of this will inevitably be inflation. Potentially substantial inflation, cash is now useless. There is no return and as inflation starts to hit, predictably in 2021 and 2022 the only game in town will be to hold real assets. London property remains one of the safest, inflation-proof assets in the world.

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    London Estate Agents / Enquiries / Sales

    Tuesday, March 16, 2021

    Nationwide expect a sharp recovery in UK house prices. Rics state that in their April survey sales levels will rebound to their previous levels within 9 months. The overall consensus is one of growth now. Given recent upheavals, it...

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