London property prices are now more than £40,000 higher on average than they were at the start of the pandemic, latest figures reveal today.
The market continued its relentless rise at the start of the year with prices in the capital hitting a new high of £534,977 by March, according to data from leading lender Halifax.
At the start of the first Covid lockdown in March 2020, the average London home cost £493,626 but prices have risen £41,351 — or 8.4 per cent — since then. Across the South-East, the market has been even stronger through the pandemic with prices going up £54,634 — or 16.5 per cent — from £331,156 to £385,790.
Halifax managing director Russell Galley said: “The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances. Although there is some recent evidence of more homes coming onto the market, the fundamental issue remains that too many buyers are chasing too few properties.
“The effect on house prices makes it increasingly difficult for first-time buyers looking to make their first step onto the ladder, but also challenges home movers who face ever bigger leaps to move up the rungs to a larger property.”
Separate data published today reveals how buyers stretched themselves to get on the housing ladder during the stamp duty holiday ordered by Rishi Sunak to bolster the property market during the Covid lockdowns.
New freedom of information data from City regulator the Financial Conduct Authority gathered by financial adviser Quilter shows that the move triggered a surge in the number of mortgages taken out with a life of 35 years or more.
In June 2021, 35,046 mortgages were sold with a term of at least 35 years, more than three times the level of June 2020.
Charlotte Nixon, mortgage expert at Quilter, said: “The lure of the stamp duty holiday was strong, particularly as it came at a time when many people had built up extra savings due to the lockdown. While many jumped at the opportunity to save on stamp duty, they may well now be stuck in long mortgages that will cost them considerably more in the long term.”
Estate agents say they have continued to see remarkably strong demand from buyers since the start of the year despite rising mortgage rates.
Guy Gittins, chief executive of agents Chestertons, said: “London’s property market has continued to see record numbers of buyers throughout January. A strong indication that the market will remain at high activity levels in the first half of this year.
“Whilst larger properties or homes with outside space remain sought-after, apartments in some of London’s more central boroughs are experiencing a steady comeback. This is particularly driven by professionals who are returning to the office and are seeking a home nearby.”
Alex Lyle, director of Richmond estate agency Antony Roberts, said: “London continues its upwards trend in prices, with the family house market doing particularly well, with large numbers of viewings, multiple offers and sealed bid scenarios common. Flats can easily get stuck if pricing is too ambitious or inflated.
“This strong level of demand is likely to remain over coming months but more stock is required across all price ranges for that demand to remain committed. The rising cost of living, increases in interest rates and conflict abroad may in time dent confidence and impact sales volumes.”
