With two vaccines now effective, will 2021 see a resurgence for the London property market?

David Hannah, Founder of SDLT specialists, Cornerstone Tax, discusses the trends, created by the news of two effective vaccines and the search for space in rural areas, and what they mean for the London property market.

Despite the stamp duty holiday fuelling a “mini boom” in the UK property market, with house prices hitting record highs, this has not impacted London flats in the same way.

The pandemic has caused an increasing number of buyers in the capital to shun flats. In London, the average price of a flat went up by more than any other property type between 2011 and 2019. This trend has reversed over the past 12 months, and flats have been the weakest performers.

This is, in large part, because the Covid-19 pandemic has prompted a shift in demand for homes in central locations to properties further afield with more space, gardens, balconies and proximity to local parks. London in particular, has seen a sharp decline in demand from renters, as people flee the capital.

Estate agents Hamptons International, claim that London flats are taking 70 days to sell on average (when they sell at all), whereas houses are taking just 29 days. Separate research by property search engine Home.co.uk, found that the typical time that rental properties are on the market in the capital is now 29 days, which is the highest of all regions, as landlords struggle to find tenants keen on city living.

Although this recent lifestyle change has reshaped demand for flats in the capital, the pandemic will not last forever, and the resurgence of London post-Covid is almost certain. The success of the Pfizer vaccine has given the British public hope that there is some form of normality on the horizon.

David Hannah, Founder of Stamp Duty Land Tax specialists, Cornerstone Tax, comments on these trends:

“The Coronavirus pandemic and stamp duty holidays have accelerated a process of de-metropolitanisation of global cities in the 21st century. Being in a city such as London but not enjoying its benefits during lockdown, will have promoted other properties on the commuter belt.

“However, when choosing where to purchase your next property, it is important to remember that this lockdown and the pandemic will not last forever. The news of two successful vaccine trials perhaps indicate that we could return to some form of normality in 2021.

“It is likely that once those in the hospitality, leisure, and entertainment industries are able to operate business as usual, or at least in a greater capacity than they currently can, the appeal of the capital will return. This will almost certainly lead to this resurgence of London, with people flocking back in, boosting both the rental and buyer markets for city flats once again.

“When the next set of graduates leave university next summer, this will further boost the popularity of city flats. For decades, young adults have moved into London after university, due to the larger pool of specialised jobs that are available. As we move towards recovery, the London job market will continue to attract talent from across the country, so we are likely to see a reverse effect of people moving back into the city again.

“When moving in and out of cities, it is important to understand the different implications of stamp duty including annexes and commercial use of land. These are important and can catch some people out if they do not fully understand the other rules that affect these types of dwellings in different locations.”

Kindly shared by Cornerstone Tax

Main article photograph courtesy of Pixabay