London review

London will always be more than one market

Robin Johnson

MD, Kinleigh Folkard & Hayward

Property markets anywhere are influenced by all manner of factors. We talk about housing supply, affordability, and demand more often than anything else, but in fact there are many other considerations when it comes to understanding the value of a home.

Proximity to (good) schools matters. Access to amenities – a GP surgery, a decent hospital, a chemist, supermarket mini or maxi, somewhere to fill up the car, and recreational facilities – these things all matter and can have a significant effect on what someone is prepared to pay for a home.

There are also geographical factors that can wipe out a home’s value at a stroke. Flood plains are a recipe for difficulty. Old extant mine shafts, fault lines, shale, nuclear waste. You get the picture.

London, as I have said before, remains a geography of many markets – all of which ebb and flow according to the distinct characteristics of the boroughs or areas you consider. It’s just one reason why anyone who thinks of London as one homogenous market will likely not understand why some parts are flourishing in comparison to others right now.

It’s the fundamental problem with broad measures. We see it with the many national monthly indices that take varied data (mortgaged and cash purchases) and endeavour to draw a national trend. It gets headlines, but rarely means anything on the ground.

For my own patch, there continues to be the usual diet of mixed views about London as a single market as opposed to its reality. There’s been a lot of housing market hype brought on by the pandemic. Many headlines trumpeted the great escape from the city to country life. We’re all working from home, ran the front pages. Commuter towns are over, said the pundits. You don’t need station access – fibre broadband access is what you really want.

Now, of course, the pendulum has swung the other way, and we have something of the opposite in some parts. Hybrid working is affecting local markets previously thought to have been abandoned but now proving very resilient.

What is clear is that many factors over and above supply and affordability go into the homebuying decision. There are reasons why many parts of London and its commuter towns remain stubbornly resilient.

These reasons are not hard and fast rules, but they go a long way toward illustrating why people undertake the home moves that they do. People like and need access to green spaces, but not everyone can work from home. An awful lot of people can’t, in fact. What’s more, people are social animals. We enjoy and are extremely affected by issues in our community – even if we do not directly engage with it. We all have a stake in where we live being a good place to live.

On a work level, hybrid working has shown (judging from the recent announcements of many large organisations) that companies like to feel in control and know what their employees are up to. Living within reach of work has not gone out of fashion. This means that trains and stations continue to be very useful. Expensive, yes, but very useful. Infrastructure, too, is important. Fibre broadband is key for hybrid working, and cities and their environs provide this – and everyone agrees that seeing someone on a screen is not the same as faceto-face.

The idea that metropolitan locations are no longer attractive places to live might grab a headline. It doesn’t really stack up, though. Looking back to 13 April last year, when England reopened from its third major lockdown, the sense of joy felt by those in London was palpable.

“Central London roared back to life with a £100m day-one spending spree in shops, restaurants, and pubs after more than a year of ghost-town desolation,” sang the Evening Standard.

“West End bosses said the first day after the easing of lockdown restrictions had unleashed the strongest reopening since the start of the pandemic and had far exceeded expectations.”

The Coutts London Prime Property Index said that by the end of Q2 this year there were “signs that London’s prime property market is getting back on form.” Prices are now just 6.7 per cent below the glory days of their peak in 2014. They’re also up 7.8 per cent compared to last year, with double-digit rises in some areas.

The price difference between central London and outer London is increasing, with central properties now 58 per cent more expensive, up from being 49 per cent pricier at the start of the year – a sign that central London property is picking up, said Coutts.

London is more than one market – in much the same way the rest of the UK is not one market. Once you understand that, you can make good buying and lending decisions. M I