Residential Market Comment Q3 2021
Residential Market Comment Q3 2021

What a turnaround we have seen in the lettings market over the last three months. The rush or stampede back into London, combined with the seasonal August and September market has seen huge amounts of applicants registering with agents. Off the back of this, Landstones has let record numbers of properties across all property types.

The COVID market price dip has seen a reversal as tenants scour the market for quality properties. At Landstones, we’ve seen a near 25% rise in rental prices with flats coming onto the market and being snapped up by eager tenants almost immediately. One and two bedroom flats are now dramatically over subscribed as many workers return to previous employment in London. Landstones have been obliged to carry out block viewings in order to cope with the sheer volume of traffic attempting to view many of our properties.

The lettings market in September has experienced an extraordinary lack of stock on top of the usual seasonal high tenant demand. Many tenants already under contract have looked around in the market for alternative properties without success, which has encouraged many tenants to extend their contracts in order to take advantage of lower COVID pricing for another year. Stock not coming back to the open market, coupled with the lack of new purchases of rental investments, has culminated in the drying up of prime central London supply. High demand paired with severe lack of supply can only mean one thing.

Advice to tenants has to be to make positive steps and grab quality properties whilst they’re available. The excess demand and lower supply are already putting remarkable upward pressure on prices, meaning we will soon pass the pre-COVID highs.

Despite the flurry of market activity London is still suffering from the lack of international travel. Quarantine, airport security queues, testing and the traffic light travel system have had a dramatic effect on the number of international buyers able to visit London. This lack of overseas buyers has discouraged many London vendors from bringing their properties to the market. The common misconception amongst buyers seems to be that due to the COVID market conditions, they would be able to snap up a bargain – this has however not proved to be the case. During periods of market contraction, many London buyers simply hold onto their assets to sit out the storm and wait for the better times to come, this is also made much easier by record low interest rates meaning holding costs for even vacant property is minimal. This holding in turn drives a lack of stock that is always present in the prime central London market, and can often force a slowing market back into a period of growth.

The lending landscape for mortgage buyers remains very attractive with the Bank of England once again holding interest rates at a rock bottom 0.1%. At these levels, the lending market continues to be very competitive, with many lenders rushing to offer new products with tertiary factors outside the headline rate figures. Relaxation of criteria around LTV should see access to lending becoming easier for first time buyers and those with smaller deposits.

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