The Current State of London’s House Prices

One of the world’s most active and influential cities, London, remains one of the world’s most dynamic real estate markets.

As at 2024, the story behind house prices in London has grown to be a complex mixture of economic, market and end user factors. 

This article provides an insight into the latest trends and statistics on London’s housing market. 

  • Latest trends in the housing market in London
  • Statistic on the current housing market in London 
  • Recent Headlines stirring the market 
  • Overview of the housing market in London 
  • Conclusion As one of the world’s most active and influential cities, London is a major focus of demand and investment for the international real estate market.

Overview of Recent Trends

The latest figures from the Office for National Statistics (ONS), which were reported in the Evening Standard, indicate that house prices in London have risen slowly in the past 12 months.

In May 2024, the average cost of a house in London was £534,000, marking an increase of around 3% on the previous year.

These figures are much more restrained compared to previous years when prices saw large increases.

Factors Influencing House Prices

Several key factors are contributing to the current state of house prices in London:

  • Economic conditions: The general economic environment (interest rates, inflation and employment levels) remains an important influence on buyer confidence and affordability. Recent economic stability has helped sustain price growth. 
  • Balance of Supply and Demand: The difference between the supply and demand of houses is still a key point. Demand still outstrips supply, especially in the central area, although the number of construction projects has risen.
  • Policy changes: Affordability and home ownership-related government moves have also made their mark. For example, stamp duty changes and affordable housing schemes are already affecting buyer behavior and the market.

Regional Variations

London’s housing market is highly segmented. You would have to travel from one borough to another to come across different prices for houses.

Prime central areas, for example Kensington and Chelsea, still have some of the highest prices. Besides, outer boroughs like Barking and Dagenham are less expensive than prime central London.

High-Value Areas

  • Kensington and Chelsea: A borough marked by mansions and millionaires, it remains one of the priciest London boroughs, with house prices averaging over £1.5 million. 
  • Westminster: Also having homes attracting high values in the market is Westminster, which has central location and has properties related with very high status. Average house prices are about £1.2 million.

Emerging Areas

  • Barking and Dagenham: This borough is one of the more developed and regenerated areas, so it’s more affordable and appreciating faster than most, with an average house price of about £350,000. 
  • Croydon: good transport links, lots of estates being regenerated, and the average home about £400,000. 4.

Market Outlook

Moving forward, Buy Association Group, a forecasting group of experts, believe that market capitalisation in London is likely to increase with continued moderate growth.

This can be supported with the real estate market still having sustained growth with fundamental stability and the ongoing initiative by the government.

They also think that this trend is not likely to disappear anytime soon with the sustaining demand. There also exist some potential risks to the prognosis by the forecasting group.

A sudden economic downturn in an industry sector may cause contraction in the demand for real estate in capital cities in the European region.

An unexpected change in the benchmark interest rate imposed by the economic organization like the European Banking Authority may also negatively impact the demand by respective countries, which in turn could affect housing transactions in London.

Key Considerations for Buyers and Investors

  • Affordability: Are you in a financial position to buy? How would a future interest rate hike affect your mortgage payments?
  • Location: if you can, aim to invest in areas that are growing fast and have good transport links, which usually hold up long-term returns. 

All relevant market conditions and regulatory changes should be communicated to the customers from time to time.

Jason Harris-Cohen, Managing Director of LandlordBuyers says that “This equilibrium explains the current state of the Capital’s property market, which fundamentally sits on a bed of economic propellers – the ups and downs of which are controlled by supply and demand factors, tainted by a geographical differential.

High-value areas behaved exceptionally from the bottom surge of 2009 to the tip of the recovery in 2014, cementing their position at the top end of the bracket.

However, what is certain about the London property market is that, as it fluctuates and crumbles, and as a new composition of property-buyers take their positions in an era of a booming equity market, transactions in the market will continue to accelerate in different directions. To stay ahead of the game, buyers and investors should therefore keep their eyes and minds wide open.”