London Property Price Forecast

Reduced affordability and demand for property in response to the wider cost-of-living crisis put downward pressure on property prices across the UK; and it was London’s property market that bore much of the brunt. This was due to its comparatively higher average property prices and greater borrowing requirements.

But the London property market is traditionally robust due to the city’s position as an economic, financial, cultural and entertainment hub and the enviable lifestyle it provides. Its popularity is unwavering amongst homebuyers – both domestically and internationally – and this was evident by the second half of 2023 when it became clear that the predicted 10% decline in property values failed to materialise. Instead, London remained relatively resilient, with Zoopla data revealed just a 2% decline in London property values by the end of the year, second only to the East of England (-2.6%) and the wider South East (-2.4%).

By the last quarter of 2023, the downward trajectory of the London property market began to ease as The Bank of England continued to hold interest rates at 5.25% in line with decreasing inflation rates, giving hope that interest rates would begin to fall in the new year.

Data began to look far more promising, leading property experts to revisit their previous predictions as homebuyer demand began to pick up for the London market.

Demand for apartments for sale in London remained high throughout the year, and this is a trend that has continued well into 2024.

Zoopla’s September House Price Index confirmed that whilst buyers seemed to be holding out for the type of property they wanted, apartments in London experienced a surge in demand, reinforcing the appeal of apartments in the Capital and this resulted in a more moderate decline in property prices than any other type of property. According to semi- and detached properties respectively by December 2023.

Overall, property experts Zoopla revealed that demand for property in London was leading the way in the UK markets recovery in the first few weeks of 2024.

While property price growth contracted for most of 2023, London’s private rental market continued on an upward trajectory as the chronic mismatch between supply and demand remained.

Finishing the year with 6.9% annual growth in private rental prices in the 12 months to November, London once again outperformed the wider UK’s 6.1% increase during the same timeframe. According to the Office for National Statistics, this was the highest annual percentage change in England and the highest annual increase for the capital since records began in 2006.

Rightmove recorded a 16th consecutive record in newly advertised rental prices, however, Q4 saw slowed growth as more properties became available. Data from The Royal Institution of Chartered Surveyors (RICS) reported in their November 2023 UK Residential Market Survey that demand continued to grow and the disparity between demand and supply – although moderating – remained a key factor in rising rents.