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23 Aug, 2019

London Property Market Forecast

    London Property Market Forecast: What Can We Expect?

    The London property market has faced some turbulent times in recent years, leading many to question the reliability of property investment in the capital. Turn back time, however, and you’ll see that London was once praised for its property market. With the high demand and growing house prices London offered, many people began to seek a buy-to-let property for sale in London.

    In this property investment guide to London, we’ll explore how London’s buy-to-let market has changed over time, along with looking at the best area for property investment in London today, London property market forecast predictions and how these tie into overall UK house price growth, and what house price predictions for London mean for your future UK property ventures.

    London

    The History of the London Property Market: How Have London Property Prices Changed?

    The capital of England and a major tourist spot for visitors from around the world, London plays a huge part in not just the UK economy but the global economy too. London has long been a main point of interest when it comes to the UK housing market, attracting property investors from around the globe.

    The London Property Market in the 1990s

    Back in the 1990s, savvy investors snapped up properties in some of the most coveted London locations, many of whom were unbeknown to how central London property prices would grow by the 2000s.

    In a feature by the Guardian in 2016, interviews were published with a range of people who purchased London real estate back in the ’90s and saw their property values grow. In one case, a man purchased a central London apartment for £218,000 in 1996, which was valued at a whopping £1.5 million by the end of 2015. In another, a Victorian terraced house was bought for £80,000 in Oxford and was valued at at least £525,000 by late 2015.

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    London Property Price Growth After the Property Market Crash

    Fast forward ahead to 2007, during the time of the financial crisis, and a typical London property near King’s Cross station would be purchased for £200,000 and is now worth over £300,000. Although not as impressive as the gains made on properties purchased in the ’90s, this figure shows that London’s housing market had continued to make some growth in the 2000s. But what about property price growth and house price predictions for London in recent years?

    Look at the last couple of years, and the figures show that the boom in London property prices that was seen decades ago is now over. House price growth statistics for London are not what they used to be, with property prices having slowed in 2016 for the first time since 2008. As of 2020, interest in the London property market had massively decreased due to a fall in London property prices.

    London House Price Predictions in 2019

    If you researched any London property market news in 2019 and kept up with the latest figures, you will have been hit with statistic after statistic revealing the decline of property investment in the capital.

    Just six months or so into the year, during mid-2019, the average property price in London was reported to have fallen at the fastest rate in ten years. This annual drop in London property prices came following a gradual slowdown seen over the last two years. Pair these negative growth rates with the disappointing average rental yields that come with the London property market, and many investors were left wondering whether they should avoid London investments, or whether London property price predictions for the future could change.

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    Brexit and the London Property Market Forecast for 2020

    Many people believed that the slow in London property prices had come as a result of Brexit uncertainty causing UK property prices to plummet. However, figures showed that when it came to property prices after Brexit, the property market in many cities remained robust in the face of negotiations following the 2016 Brexit vote. Fast forward to 2020, with the UK having now officially left the EU, and many property experts have offered house price predictions for UK cities, including London.

    So, will London house prices go up in 2020 and beyond? Overall, London property market forecast predictions from various property experts have revealed that London property prices are looking up. Thanks to the market certainty brought on by the 2019 general election result and the so-called ‘Boris Bounce’, house price predictions suggest London properties will see a level of growth over the coming years.

    Covid-19 and the London Property Market

    Often considered the best property investment possible, the London market had quite a difficult few years due to Covid and Brexit.

    As a result of the Coronavirus pandemic and its subsequent lockdown, the London property market, and the UK market overall,  had quite a turbulent year for much of 2020. As housing market activity slowed after the lockdown went ahead in March and fewer people were interested in buying new homes, the residential market came to somewhat of a standstill.

    Following on from their last property price predictions for the UK, in which they stated a London property forecast decline of -2% in 2020, Savills changed London property predictions to show a larger drop of -7.5%. However, not only were London property prices forecast to change, but every other region in the UK was also set to see the same decline in 2020 due to the Covid-19 pandemic.

    The good news is that property prices in the UK shot up again once the economy has recovered. By 2021, North West house prices were predicted to have grown by 8.5%. London property predictions by Savills also revealed an expected growth of 6% by 2022, a much more optimistic figure. It’s worth keeping in mind, however, that although London property prices were forecast to rise, their five-year growth rate is the lowest out of all other UK regions – something which has continued into 2023.

    Currently, the average London property is valued at £885,406, according to the latest available Land Registry data in January 2023.

    This is 7.023% higher than recorded the year prior but is a decrease of 7.11% compared to December 2022.

    The capital is also expected to see the lowest growth across the next five years, with an expected negative increase of -1.7% by 2027.

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    How do London Property Market Predictions Compare to the Rest of the UK?

    Property prices in London are set to decrease by 12.7% in 2023, a drop that is 4.2% more than in the North West and Yorkshire.

    There’s also minimal growth expected in 2023, 2024, and 2025, with an overall five-year increase of -1.7%.

    When analysing predictions for UK house prices as a whole, things look a lot brighter in areas outside London.

    In a house price forecast by region from Savills which looked at the property price forecast for the next 5 years, it was revealed that the North West property market is set to see a growth of 11.7%. The North West region, home to two cities with some of the strongest emerging markets – Liverpool and Manchester, boasts a booming property market that’s attracting the attention of many savvy investors.

    High populations of students and young professionals have led to a demand for property and rental price increases of up to 7 per cent in Manchester. Many of those reportedly moving away from the capital are choosing to live and work in the North West instead, with a record number of Londoners having moved to Manchester back in 2017.

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    Should I Invest in the London Property Market?

    London was once one of the UK’s most promising spots for investment, but today’s figures point towards alternative UK cities for a more lucrative venture. While for the property market, London forecasts show some attractive growth in future years and in certain boroughs, this doesn’t change the fact that the current price of properties in the capital is too far out of reach for many investors.

    According to Zoopla, the asking price of average house prices in London is around £742,157. Pair that with the fact that prime central London offers some of the lowest rental yields in the country, and the majority of buy to let investments in the capital just don’t seem worthwhile.

    Investors adamant to buy in London should do so with caution, researching the very best areas for rental demand, yields, and capital appreciation. However, if you’re looking to make significant returns on your UK property investment through rental income and capital growth, looking up North is a good idea.

    FAQs

    London Property Market Forecast 2023 - 2027

    2023

    London property predictions from Savills show negative growth for 2023 with a decline of -12.7%, in line with the rest of the UK.

    2024

    According to Savills, London property prices are forecast to experience more negative growth of -1.0% following the decline in 2023.

    2025

    Prices are expected to rise by 2.0% in 2025, following the drop two-year decline.

    2026

    By 2026, London property predictions from Savills show a further growth rate of just 6.0%. During the same year, UK property as a whole is expected to rise by 3.5% on average.

    2027

    By 2027, however, London property forecast predictions show that property prices in the capital will have fallen -1.2% since 2023. This is much lower than the growth expected for the UK as a whole and pales in comparison to the amount predicted for Northern regions.

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    UK Property Investment with RWinvest

    If you’re ready to explore current UK investment opportunities but you’ve been put off by London prices, contact RWinvest today. We work with a range of clients, including overseas buyers, and take pride in helping investors find the ideal property for their investment strategies. With a choice of student or residential property investments in top-performing cities, Liverpool and Manchester, we can find you an investment property that aligns with your goals, budget, and investment needs.

    Disclaimer: This guide was updated in May 2023. All statistics displayed are likely to change according to property market fluctuations and may no longer be accurate depending on the date you read this content.

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    Reece Pape

    Reece Pape is a property writer at RWinvest. Reece is passionate about keeping property investors updated on must-have information and housing market news, utilising the latest property market statistics and data.

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