What does it mean to invest in the London property market?

Dealing with post-pandemic economic situations hasn’t been easy, to say the least. The ‘pinch’ has been felt globally and as we have seen, in comparison to the previous years, 2022 wasn’t the greatest year, but some progress was seen with a degree of a financial turnaround. 

2023 was predicted to be a year of challenge to the financial sector. Especially in the UK, we’ve seen falling house prices, hiked-up bank rates, and higher mortgage rates. Analysts and financial gurus speculate and predict trends that could affect the financial markets significantly. With all this to run through, let’s look at what it is to invest in a property in London this year.

The property market in London, what should I know?

Did you know that the London property market is probably one of the most established in the world? Interestingly an article by www.theedgemarkets.com states how 85% of central properties within London are already owned by foreign investors. Even more interesting is that during economic crisis situations, foreign investment has been known to increase rapidly. This shows that London retains the ability to attract foreign investment, even during difficult times

This information is useful insight for investors seeking potential returns in and around London, with foreign investment continuing to be a major factor.

‘London is a modern day Babylon’

That famous saying was by Benjamin Disraeli, former Prime Minister of England And how correct was he. London offers a wide range of property options. As a modern capital city offering excellent amenities and facilities, it is potentially an attractive place to invest in property. 

Having said that, property prices and the market in London can be rather volatile. External forces do play a significant role when it comes to regulating property prices within this dynamic city. Government policies, global effects, and the economy are external variables that easily affect deciding factors on how cheap or expensive and how stable property prices will be. 

Now that we know what the London property market is like, lets take a closer look how external forces play a pivotal role in dictating property values in London. 

Government policies: 

Forces that cannot be controlled and is beyond our scope is usually termed as external forces. As any real estate business owner will tell you, government policies is one such external force that dictates property market conditions significantly. The value of the property is impacted greatly when changes due to government policies occur. Tax, surcharges, stamp duty and immigration policies have consequences on how well the property market will fare in the short and long term.

A typical example of the above could be when an investor wants to purchase a property in London and is forced to incur a hefty government induced stamp duty. This could result with a negative perception that deters a prospective investor from going ahead with the purchase. And in the long run, create a less attractive market environment to an otherwise highly sought after array of properties.

Economic conditions: 

The recent exit from the European Union – Brexit, was a classic demonstration of how economic conditions can have a profound bearing on property investments.

Brexit created an air of economic uncertainty within business circles. With investors not feeling as confident with Britain’s exit from the EU, they were reluctant to invest fearing price drops that could follow the Brexit move, signifying a weakening economy.  Although Brexit took place in 2020, here in the year 2023, we continue to see some residual effects that are affecting the markets even now and may do so in the future as well.

Global tensions: 

Who would think that events half way across the globe could affect property values in London? Guess again, yes they do have an effect on property prices, values and sales. 

Many real estate companies watch global situations as they unfold to be prepared for a backlash that could occur. And when they do occur, they pose a series of challenges for investment opportunists, who may experience an overnight market drop.

To be ahead in the game of managing your property portfolio investments, it is best to keep abreast of what goes on globally. Watching world markets, policy changes and political unrest could help you predict what might be forming in the near future and help protect your investment. 

It must be said that global situational outcomes are not always doom and gloom, some situations will actually help with property sales. Large economically based cities such as London feel the ‘pulse’ of what might be the predicted outcome of certain economic conditions even before they come into play. 

Why not speak to an expert adviser at BVS Mortgages & Financial Services Limited? Our expert team of advisors are well versed in dealing with property markets, especially in London. They will be able to advise and guide you, helping you to make the right decision at the right time when considering a potential opportunity. 

Conclusion

London city is a hot spot for investment to say the least. However, being aware of external forces and how to deal with them is cruicial. Seeking the assistance of a professional mortgage advisor is a great way to stay informed of the deal. 


YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Approved by The Openwork Partnership on 3rd April 2023

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