London Apartment Values Are Starting to Rebound After Covid Hit
(Bloomberg) -- London’s apartment market is showing signs of life again after the pandemic caused prices to fall to their lowest in nearly five years.
The average sale price of an apartment in the city was almost 518,000 pounds ($714,000) at the end of February, 1.2% more than their October low, as the rapid vaccine roll-out makes city living more attractive again, according to data compiled by researcher Acadata. Analysts, however, caution that there is a significant lag in home sale registrations at present and the data may be revised as a result.
Developers, betting on a rebound in demand for apartment living in London, will hope the rise in values is an early sign of recovery even as the pandemic-driven boom across the U.K.’s wider housing market shows signs of slowing. Apartments prices in the capital dropped more than 10% from December 2019 to their trough in October last year, the Acadata analysis shows.
That could have hurt homebuilders, who are planning to construct almost 500 buildings of at least 20 stories around the city, data from property company Molior show. There were 123 projects of that size under construction at the start of the year, compared to just 21 a decade ago.
Beyond the Pandemic
Buyers have started looking beyond the pandemic as the U.K.’s vaccination program gathers pace, said Iwona Hovenko, a real estate analyst at Bloomberg Intelligence.
“There will a group of people eager to enjoy the thrills of city living after being deprived of it for so long” and overseas buyers can still benefit from a weak pound relative to the long-running average exchange rate with the dollar, she said.
There may be further volatility later this year, however. The combination of an economic slowdown due to Brexit and the end of a tax break on home purchases will weigh on the capital’s housing market going forward, researchers from the London School of Economics said in a report on Tuesday.
“We expect the historically unusual situation of a housing market downturn more substantial in London and the South East than in most other parts of the U.K.,” wrote Paul Cheshire, emeritus professor of economic geography at LSE and a co-author of the report.
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