London Housing Market in 2024: A Shift Towards Affordability

Introduction

As we enter 2024, London's housing market presents a narrative of increasing affordability, starkly contrasting to the peak unaffordability witnessed in 2016. This shift aligns London's property market with affordability levels last seen in 2014, as revealed by recent data from Zoopla.

Market Analysis

1. Current State of Affordability: Zoopla's latest figures indicate a significant shift in the London property market. The average property price in the capital now stands at 13 times the average earnings, a notable decrease from the high of 15 times in 2016, echoing the affordability levels of 2014.

2. Buyer Demand and House Prices: Despite a robust 21 per cent year-on-year increase in buyer demand, London's house prices have shown a subdued trend, with a 1.1 per cent annual decrease. This slight price dip, coupled with a rise in earnings, signals an improvement in affordability.

3. The Impact of Mortgage Rates: Mortgage rates have doubled since 2021, creating a landscape vastly different from 2014, when the Bank of England's base rate was a mere 0.5 per cent. This increase in rates has had a considerable impact on market dynamics.

Market Dynamics

1. Supply and Demand: The supply of homes for sale has increased by 22 per cent compared to last year, offering buyers more choices. Despite higher mortgage rates, the demand for property remains strong across both Inner and Outer London.

2. Regional Variations: While prices have been generally reduced across most boroughs, Barking and Dagenham have bucked the trend with a minor annual increase of 0.4 per cent, setting the average house price at ￡331,400.

3. Market Segmentation: The flat market in London has been particularly sluggish, with values only marginally higher than in 2016.

Expert Insights

Tom Ashwood of Tom Ashwood Real Estate has observed a spike in activity across all price ranges in early 2024, with buyer inquiries and property listings surpassing expectations. Richard Donnell, Executive Director at Zoopla, notes that while sales volumes have improved, the market still favours buyers, suggesting that house prices may rise less in 2024.

Conclusion

The London housing market in 2024 presents a landscape of increasing affordability, a boon for potential buyers. However, the doubled mortgage rates and varied regional trends paint a complex picture. The market's future trajectory remains cautiously optimistic, with affordability improvements tempered by other economic factors.