Bank of England report signals London property market recovery
Experts believe that the sluggish London property market is set to speed up after the Bank of England (BoE) reported that mortgage approvals increased by six per cent between September and October this year.
When compared against figures recorded in August – at a time when the market was still reeling from the shock of the Brexit vote – October shows a substantial ten per cent improvement. The BoE’s report also noted a £1.6bn increase in consumer credit, which is a year-on-year increase of 10.5 per cent and the strongest figure for eleven years.
The number of approvals in October stands at 67,518, considerably less than the all-time high of 1988 (151,800) but nevertheless an improvement on the biggest recorded low of just under 27,000 recorded in November 2008 following the financial crash. Over the past year stamp duty changes and Brexit fears have once again affected property in prime London areas, but the month-on-month improvements in mortgage approvals since the summer hint at a slowly improving picture, and this view is endorsed by a number of mortgage lenders.
Mark Dyason, director of Edinburgh Mortgage Advice, says “Brexit has created uncertainty but increasingly that uncertainty is causing people to act rather than do nothing. Uncertainty is emboldening buyers to take action. Prices in many areas, and certainly the south of England, are a lot more attractive than they were a year or so ago. In many cases it’s a buyers’ market and they are increasingly taking advantage of this fact. Better prices and the best mortgage rates you could imagine in a political environment that could change very quickly is causing people to act.”
Jonathan Sealey, CEO of Hope Capital, agrees that “lender appetite has continued to grow post-Brexit and, indeed, much quicker than first anticipated”, while property professional Jeremy Leaf, formerly Residential Chairman of RICS, adds “Following an initial pause, buyers are getting back to business.”
The perfect storm of softening prices and advantageous mortgage rates means that conditions are now right for buyers to take the “bold step” described by Mark Dyason above. Investors looking to buy London property will benefit by taking a long term view; investing in the best property in the most sought after locations while there is less competition and while prices remain at sensible levels.
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