The beginning of 2022 started with great hope and optimism in all our lives and the wider economy as a whole, if not tinted with a little hesitation. The end is now in sight, and we are all hoping to return to normal as quickly as possible. Huge numbers of workers have started returning to offices across the capital and the trickle has swollen to a torrent of life pouring back into central London.

More people can only mean on thing, demand, demand, demand. The lettings market has been the first to take off like a rocket. Best in class properties were the first to go as eager tenants snapped up the last of the Covid priced flats before the market adjusted and began to catch up at pace. Since January 2022 residential lettings prices have been increasing across the city at the fastest rate since records began. At the time of writing the stock available on the market is being offered at between 10 to 15 percent higher than pre-Covid levels. The combination of lack of fresh supply and properties clogged up with artificially elongated tenancies left over from Covid lockdowns have had a major constricting effect on available property.

There is mounting pressure on the chancellor to act swiftly and decisively to alleviate the constriction on supply of homes. Specifically, the 3% stamp duty surcharge on buy to let properties. According to analysis by Capital Economics, scrapping the stamp duty surcharge would boost housing market activity by encouraging investors to invest in properties and that would in turn help meet the growing demand for rental homes and drive up transaction levels. The economic consultancy believes that removing the 3% levy would see almost 900,000 new private rented homes made available across the UK over the next ten years.

Overall house price growth in the capital remains strong with average house prices hitting record highs. Towards the 4th quarter of 2021 London found itself lagging behind the country as a whole in percentage growth rate as the effects of the Covid exodus were being felt. While London remains the weakest performing area of the UK, its annual house price inflation has accelerated for a third straight month now standing at 4.5% – the capital’s strongest performance in over a year – as people returning to the city, a strong labour market and affordable mortgage rates combine to heat the residential housing market in prime central London.

With the Bank of England’s interest rate hike to 0.5%, there’s been speculation that this may affect the market or any further growth. However, the level of demand we are continuing to see this year, currently 34% higher than this time last year and 71% higher than in 2019, only intensified by the city returners and favourable market conditions, suggests the rise will unlikely dampen the motivations of those looking to move.

With the world now embroiled in wider conflict that only 3 months ago was not even on our radar we see investors rushing back to the safe and stable currencies of the pound and the US dollar. Property and gold have always done very well as asset classes in times of turmoil and stress in the economy. The outlook for London’s housing market for both owners and landlords is extremely strong for the near future.