London house prices: 2021 outlook and property market predictions
Average price hit a record high at the end of 2020, but Londoners are leaving the capital
Peter Macdiarmid/Getty Images
Across the UK, home buyers and sellers are rushing to complete deals ahead of the Stamp Duty holiday deadline on 31 March - and London is no exception to the trend.
Despite the economic uncertainty caused by the Covid-19 pandemic and Brexit, the UK’s property market enjoyed a robust year in 2020.
Here we look at the average house prices in London and the UK and predictions for the capital’s property market in 2021.
Nationwide: London average reaches £486,562
In its latest house price index, Nationwide reported that the annual house price growth “accelerated further” in December, reaching a six-year high of 7.3%, up from 6.5% in the previous month.
The building society said that all regions in England recorded prices rise over the year, within a “fairly narrow range of 5% to 9%”. London saw a 6.2% increase, with average prices reaching their highest ever at £486,562. The average UK property price is £230,920.
Halifax: prices hit record high, but expect growth to slow
According to Halifax house prices ended 2020 at a record high with the UK average reaching £253,374 - a 6% annual rise. However, Britain’s biggest mortgage lender says growth is slowing and prices may fall over the year, The Guardian reports.
Halifax managing director Russell Galley said: “Average houses prices rose again in December, stretching the current run of continuous gains to six months.
“However, the monthly rise of 0.2% was the lowest seen during this period and significantly down on the 1.0% increase in November. The average house price was therefore little changed, but nonetheless still reached a fresh record of £253,374.
“With the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”
London’s population to fall
Pent-up demand and buyers seeking houses with more space led the UK’s property market to record highs at the end of 2020. However, in London the demand to leave the capital is a major trend.
The Guardian reports that London’s population is set to “decline for the first time since 1988”. The exodus is likely to be spurred by the economic fallout from the Covid-19 pandemic and the rise of home working.
According to accountancy firm PwC the number of people living in London could fall by more than 300,000 in 2021 - from a record level of about nine million in 2020.
Londoners buy 73,950 homes outside the capital
Hamptons says there has been a “clear increase” in the popularity of London outmigration since the onset of Covid-19.
“In 2020 London leavers purchased 73,950 homes outside the capital, the highest number in four years,” the estate agent said. “Collectively, Londoners bought £27.6bn worth of property outside the capital [last] year, the highest amount since 2007 when London outmigration peaked.”
2021 forecast: will London bounce back?
The momentum of the housing market activity is expected to lead to a “strong start in 2021”, said Zoopla. Annual house price growth is predicted to reach 5% in February, before slowing to 1% by the end of 2021, as demand starts to weaken during the second half of the year.
Despite the trend of residents leaving the city, the Daily Mail reports that London house viewings are “bouncing back” and house-hunters could be poised to return to the big city.
The paper said: “Estate agents now predict a boom in sales in London in the wake of an exodus of City workers last year, who fled lured by the prospect of working from homes in the countryside and on the coast.”
Dexters expects London sales and lettings transactions to double in volume in 2021. Boroughs tipped to be “star performers” are Camden, Kentish Town, Tufnell Park and Kensington and Chelsea.
Estate agent Russell Quirk told MailOnline and This is Money: “I firmly believe homeowners and buyers will return to the capital. While transactions in London in 2020 were down dramatically, demand has started to return from enquirers via the portals.
“I think there is some data that shows there was a bit of an exodus, with several estate agents reporting more people moving out than into London. But it has to be said that some of those reports are merely self-serving for firms.