London is essentially the most invaluable marketplace for property brokers producing virtually £3bn a yr in revenues from gross sales and lettings alone. That is virtually a 3rd of the nationwide whole for a area with lower than 15% of all properties.
Excessive property costs and rents have created a bigger worth pool, however it’s been removed from plain crusing for London’s brokers, particularly these in gross sales and new properties. This theme was obvious in conversations with the over 230 brokers who attended our London Property Pitch roadshow occasion at The Oval final week.
Not like different elements of the nation, the lettings market is the true driver of property company revenues within the capital. The non-public rented sector in London has trebled in dimension since 1995 to virtually 1 in 3 properties. Revenue from lettings and administration accounts for 3 quarters of the full worth of property company in London. The nationwide common is 50:50.
The worth of the gross sales market in London can be larger than another area, however it’s dwarfed by the earnings from lettings. Gross sales volumes of 85,000 a yr are working at half the degrees seen within the decade as much as the worldwide monetary disaster (160,000 a yr). Tax adjustments in 2016 alongside new mortgage laws and better mortgage charges since 2022 have all impacted demand for properties. Stamp obligation prices are additionally excessive in London performing as a barrier to gross sales – patrons in London and the South East account for 50% of all stamp obligation receipts.
On a easy affordability measure London’s home costs are 11x common earnings. That is down from over 13 a couple of years in the past and it’s beginning to fall as earnings rise quicker than home costs. Enhancements in mortgage affordability will assist in the close to time period however it’s going to take a couple of extra years for pricing to realign with incomes to a stage that helps a sustained restoration in gross sales volumes.
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