Winkworth say the London market will be supported by ‘bargain hunters’ and international investors
(Picture: Daniel Lynch)One of London’s biggest estate agency chains today forecast a five per cent fall in London property prices next year but said the capital would avoid a crash.
Winkworth is the latest big name agency to make its predictions for the market at a time when buyers have been spooked by soaring mortgage rates and the chaos that followed the botched mini Budget.
But the agency said the London market was taking a “pause for breath” rather than going into panic mode and would be supported by “bargain hunters” and international investors.
The forecast fall is smaller than predicted by some other commentators who warn of double digit declines.
Chief executive Dominic Agace said: “ We have looked at demand and at the height of the turmoil at the end of September and early October, there were seven applicants for every property compared to 10 applicants for every property before the mini-budget.
“However, when you compare this with 2019, there were seven applicants for every property, roughly the same as now. The market lives off momentum. There was huge momentum due to low interest rates, with prices up by 20 per cent. What we are seeing now is a slightly earlier Christmas as people settle down to the new environment with interest rates and the cost of finance. We may see five per cent coming off prices...but that is in the context of 10 per cent price increases this year and 20 per cent over the past two years in some areas.”
Adam Stackhouse, who heads up development and commercial investment team at Winkworth, told its property exchange podcast: “There is no sign of panic, more a pause for breath and a moderation of the market against record periods of growth. Tourism is a key driver to the success of large-scale urban regeneration such as Battersea Power Station and locations near historic monuments.
“Small to medium size developers are overstretched. With newbuild reservations set to fall off in 2023, developers will struggle to raise equity. There are lots of bargain hunters around and there won’t be enough bargains to go around over the next 18 months. Some people have taken too much risk However, the backbone of the market is strong and stable. The UK remains a very desirable location for international investors.”
House price forecasts: what are others predicting?
Property prices will fall faster in the capital than anywhere else in the country next year as higher mortgage rates send the market plunging, according to Savills. Prices outside the most exclusive addresses of central London will slump by 12.5 per cent next year with a further one per cent dip in 2024, before a recovery begins in 2025.
However, even by 2027 prices will not have fully recovered the lost ground and will still be 1.7 per cent below current levels. Savills said owners in London and the South-East will be worst affected because they have stretched themselves most with the highest levels of debt. Prices across the UK as a whole are only expected to fall 10 per cent.
Forecasts published in October by estate agent Knight Frank predict a fall in the average house price across the capital of 10 per cent over two years, taking values back to where they were at the start of 2021.
