Is London Losing its Lust?

There is no denying that the pandemic has been catastrophic for millions of people.  However, for better or for worse, it has also reshaped the way many of us live our lives, which I believe could have a lasting effect not only on individuals and businesses, but also towns and cities.

The most obvious example of this, is of course London. For the first time in decades, London’s population is falling and demand for boltholes in the countryside are on the rise. Overseas students have stayed away and many foreign-born residents have returned to their home countries, either due to job-losses or to spend lockdown with their families rather than be alone.  As the pandemic and its subsequent lockdowns have dragged on, many tenants are not renewing their tenancies so that they can move further out of the city and live somewhere with more space, both indoors and outdoors.

In terms of the lettings market, this diminishing demand, particularly for apartments, has seen rental prices plummet.  According to Zoopla, reductions of more than 25% are not uncommon across central London, rents have fallen by 15 per cent in the City and 10.2 per cent in Kensington & Chelsea.

Despite London house prices having grown since the first lockdown ended, it is the outer boroughs that have been of greatest appeal, as more people look to move away from the inner-city in search of space. House prices have been bolstered by the government’s stamp duty holiday, and as the 31 March deadline draws near, this is suddenly changing the sentiment of the market. Sold prices across prime central London Postcodes have actually fallen 10 per cent since the start of the pandemic.  Mayfair and St James’s were the worst hit followed by Kensington’s W8 postcode.

In December, London property prices suffered their biggest fall since the market re-opened in May. The average cost of a home in the capital dropped 1.1 per cent in the month making London the only region in the country to record a fall. That dragged the annual rate of increase down from seven per cent in November to just 3.5 per cent in December, the lowest in the UK.

There is, of course, the possibility that with the vaccine rollout underway and case numbers dropping daily, that once lockdown is released the Capital will return to its previous vibrant and bustling way of life. Personally, taking into consideration economic conditions, unemployment levels and a new found appreciation for a slower way of life, I believe we are more likely to see a longer-term reduction in demand for both sales and rental properties in London.

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