1. Why has outer London generally performed better than inner London this year?
The answer is simple – the performance has been fuelled by very different levels and motives of demand and supply. Outer London generally has much more appeal for families and so purchasers here will typically occupy the properties themselves. Inner London, however, is more investment focused, and 2018 has seen inactivity throughout this more central market as a result of high supply (investors trying to dispose of assets and exit the market) and low demand (a lack of investment return opportunities for prospective investors) following increased tax liability and economic uncertainty. The difference is that people need somewhere to live regardless of influences on the market – whereas investors do not need to act immediately, in fact we’re seeing at least 80% of our landlords holding tight until those market influences play out and performance improves one way or another.
2. What do you think is going to happen to prices/the market in inner London during 2019 and why?
Investors like stability, and there is unlikely to be any considerable certainty in the inner London property market in the next 12 months, with politicians stalling on Brexit plans while continuing to pinch landlords with tax reforms. The price of a property for sale is not a great market indicator right now, as a property’s true value, and what someone is willing to pay for it in 2019, are two very different numbers – a purchase would have to be an incredible ‘bargain’ for an investor to take the punt in this market – and only investors who are cash-rich and with high equity in their existing portfolios are in a position to do so. It’s unlikely that prices will plummet any further, but the volume of transactions in inner London will remain low next year.
3. What do you think is going to happen to the prices/market in outer London during 2019 and why?
Outer London’s market performance will largely be dictated by the domestic economy and family motivation. Borrowing remains cheap and there is competition among mortgage providers to offer very low interest rates over longer fixed terms – this variable will have the strongest influence on price levels in outer London and should help to keep the market buoyant during 2019. Clearly some families will put off any big moves until there is greater political and economic certainty, but this potential for inactivity is somewhat countered by a prosperous first-time buyer market fuelled by a continued supply stream of new-build units, plus government incentives like the lifetime ISA assisting with financing.