Why UK Interest Rates Won’t Dampen London property’s shine.

Brett Alegre-wood
September 29, 2022

London Property Has the Best Fundamentals Still!

London property has good fundamentals and bounces back. London property has been off the boil so doesn't have far to fall. These are just a couple of reasons why interest rates will not hold London property down for long.

In recent years, London property prices have seen a bit of a rollercoaster ride. Prices peaked in 2014 and then fell sharply in the aftermath of the Brexit vote in 2016. However, they have since recovered and are now once again on the rise.

Interest Rates May have Almost peaked

One of the key drivers of London property prices is interest rates. When interest rates are low, it makes it cheaper for people to borrow money to buy a home or investment. This increases demand and drives up prices. When interest are rising the city experiences a flight to safety response from many investors from around the world. London in 2022-2023 is likely to see this in flux of capital especially considering the recent drop in the Pound.

There is currently a lot of uncertainty surrounding interest rates. The Bank of England has said that it is likely to raise rates further, but we belief that deflation is now more of a threat than inflation. Of course most politicians are not even considering deflation or worse stagflation (where the economy has deflating prices and economic growth is stagnant. So it's likely that things will turn around in late 2022 or early 2023 and rates which have been agressively raised will begin to level out and even drop.

However, there are a number of reasons to believe that London property prices will continue to rise in the long-term regardless of interest rates.

London Property is still one of the most desirable cities

London has always been a desirable place to live and work, and this is unlikely to change any time soon. The city has a strong economy and is home to some of the world's leading businesses. It is also a major global financial centre.

There is a limited supply of land available for development in London, which means that prices are unlikely to fall sharply even if there is a downturn in the market.

London property also has a good track record of bouncing back after periods of weakness. After the global financial crisis in 2008, prices in London fell by around 20%. However, they then started to recover and had regained their pre-crisis levels by 2014.

Although interest rates may rise in the future, this is not likely to dampen demand for London property in the long-term. The city continues to offer strong fundamentals and growth prospects, making it an attractive proposition for both buyers and investors.

Zig When Others Zag...

Whilst many people will be ducking for cover astute investors will be looking to pick up bargains before London kicks again. Developments such as Calico Wharf in East London which is perfectly position for a resurgence of Canary Wharf after the lifting of banker bonus's which will attract more bankers to the city. 

Call the team if you are interested in seeing the kind of opportunities are around across London, our regeneration focus means that irrespective of the market, huge investment will assist in the growth of certain areas. 

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