Recent headlines have claimed that the London property market is cooling, slowing down, flat-lining or in trouble (depending on which newspapers you read). But the truth is a little bit more complicated, and perhaps not as negative.


The data that has triggered these headlines is interesting, as it shows a clear trend in the capital task management tools. High end, expensive property in Central London, the West End and suburban areas of South-West London are seeing prices fall. More specifically, house asking prices in these areas are being cut after the property has been on the market for a while but failed to sell. Areas such as Kensington, Hammersmith and Fulham, Westminster and Knightsbridge have all seen between 20 and 40 percent of properties have their asking prices slashed once they’ve been on the market.


So that is pretty simple then? House prices in the capital are falling and the market is cooling? No, not really. As part of the same trend, house prices and demand in other areas are continuing to increase. This is especially true in areas of East London, in places such as Bexley, Tower Hamlets and West Silvertown. In some places in the East, the price increases are as sharp as price rises seen at the height of the London property market boom. A journey on the DLR from Woolwich to Bank is littered with new developments and money being pumped into redeveloping areas in this part of East London.


So what is going on? A couple of factors could be coming into play. Firstly, London is still a growing a city both economically and in terms of population. Projections put the population of London at 11 million people by 2050, which suggests developments, house building and infrastructure growth will continue well into the future. Demand may just be shifting to different areas of the city.


That geographical element of this trend is interesting. The East being seen as a more desirable area than it has been in previous decades isn’t anything new, but the progress with the Crossrail project is only going to make it more desirable to people who work in the centre of the city but can’t afford to live there. As with anything else, politics will be playing a part too.


The possibility of the UK leaving the EU in the upcoming referendum and the recent headlines about tax avoidance and inheritance tax will both be likely to impact property prices in higher end boroughs. The reason for this is that those properties are more likely to be bought by business people, investors and potentially people who have access to offshore accounts and are impacted by inheritance tax. Whilever the media and politicians are talking about changing the laws regarding those issues, investors and buyers may hold off and so prices fall.


Further data will be released later this month which will give investors a much clearer picture of what is happening in London, and whether there are investment opportunities available for student landlords and property developers who may be looking to capitalise on lower prices and short term market uncertainty. It may turn out to be good news for London, as it could be a sign that the property market is settling down, or plateauing in certain areas, which would allow for a calmer business environment to develop longer term strategies concerning an increased demand for student accommodation, the need for more affordable housing and potentially avoiding the need to regulate the London rental market. Is the London property market cooling? Possibly, but so far it looks more like it is evolving and changing than collapsing.

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