Home Business Insights & Advice Worried about the London housing market? Here’s what to do

Worried about the London housing market? Here’s what to do

by John Saunders
15th Feb 20 10:22 am

For the last several years, the housing market in London has been tumultuous. The number of available houses has been tightening, with high prices forcing out renters and limiting options for the London workforce. Prices have fluctuated significantly, with a recent boost in housing prices following the election (despite housing prices being 5.5 percent lower this January than they were the year before).

There are varying predictions about the future of the London housing market. Some people fear the high prices and limited inventory have formed a kind of bubble, which would inevitably collapse. Others believe there are still enormous growth opportunities for investors to find. But most agree that the market could be in store for a volatile near future.

If you’re worried about the future of the London housing market, and you’re looking for something more stable, there are a few important options available to you.

For avid property investors

If you’re an avid property investor looking at the London area, it may be a good idea to get exposure to other markets. The future course of property values in London is almost impossible to predict. Depending on your access to capital and desired exposure, you could start looking at properties in other major cities in England, or get a real estate license that allows you to practice in another country altogether, like the United States.

If you have existing properties in the London area, keep a close eye on price fluctuations in response to incoming news. London real estate agents seem more confident this year, meaning you’ll likely see rising prices, but if anything shakes that confidence (like poor economic performance or political turmoil), it may be a sign to quit while you’re ahead.

For those looking to move to London

If you’re thinking about moving to London, you might be put off by the relatively high prices and limited options of the city itself. Fortunately, there are lots of alternative options. You can choose to look for a home in one of the many beautiful areas that surround London, allowing yourself a convenient daily commute while still gaining access to more affordable, more plentiful housing. If you have the power to do so, you could also look at one of England’s other major metropolitan areas, like Manchester or Leeds.

For current London residents

If you’re currently living in London, renting or owning a home, your best option may be to stay put for now. There aren’t enough economic indicators to suggest whether selling or moving is a good idea, so in the absence of something pushing you out (like a new job opportunity), you might as well stay where you are. Do watch for rent increases or a spike or fall in housing prices, and be prepared to take action if necessary.

General advice

No matter your current status or level of interest, there are a few pieces of general advice you’ll want to follow:

  • Diversify your portfolio. It’s always good advice to diversify your portfolio, but it’s especially important if most of your net worth is tied up in London property investments. Depending on your wants and needs, you may diversify your holdings by purchasing properties in other areas, funding your retirement accounts, or investing in stocks, bonds, and other assets.
  • Watch the news. Pay close attention to developments in the news. London-specific developments, like new housing growth and higher population growth, will inevitably affect housing prices. Geopolitical events and national attitudes may also bear an influence; stay tuned to housing market predictions and watch how prices rise and fall.
  • Have a plan. There are a number of directions the housing market could take from here, so put together a plan for each of them. Is there a certain point when you’d be prepared to sell?

The London housing market is showing early signs of stabilization, but with political uncertainty, population issues, and a volatile recent past, we can expect more volatility from the housing market in the near future. Make sure you’re prepared for anything, and be ready to act if we see the emergence of a new trend.

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