Guest blog – Alexander Rawlinson, ludlowthompson
Written by Alexander Rawlinson – Managing Director of Estate/Letting Agency, ludlowthompson
With 7.5 million London residents having received vaccinations, the fastest growing economy in the G7 and current mobility trends showing a 45% increase in public transport, 29% increase in walking and a 21% increase in driving over pre pandemic January 2020, these factors have inevitably led to an increase in demand for both London’s sales and rental property.
Buyer demand is 23% up over the same period last year (source; Rightmove), with ludlowthompson experiencing a 49% increase on Jan 2021 and 31% rise on Jan 2019. Whilst Interest rates are gradually stepping up, they remain fundamentally and historically low. As post pandemic wages grow, lenders show no sign of tempering their income multiples which commonly sit at over five times earnings, continuing to drive London house prices in real terms.
That’s before accounting for the £180 BN that was saved during the pandemic, much of which was saved by aspirational first-time buyers often supported by the bank of Mum and Dad who remain in the top ten largest funders of mortgage finance in the country (source; Legal and General) .
It’s no surprise then that ludlowthompson are seeing demand for each listing at 10 applicants per property, up from 4 per property in Jan 2021 and 7 per property in 2019, with the ultimate sales price often concluded by sealed bids.
Applicant demand at ludlowthompson is dominated by first time buyers who account for 71% of all applicants, two-bedroom properties remaining the most popular making up 45% of applicant enquiries. This is driven by a desire for home working space in anticipation of TWTWFH (Tuesday, Wednesday, Thursday working from home).
The return to London by generation rent has led to an increase in tenant demand with 121 renters per letting property available, compared with 32 in 2021 and 61 in 2019.
The imbalance between supply & demand has led to an increase in rents with new lettings showing double digit increases over Q4 2020 and an overall growth of 8% in 2021. The shortage of rental supply has also seen a rise in sealed bids in lettings, a phenomenon usually associated with the sales market.
When looking back over the pandemic, Landlords will reflect that they did not experience the voids or arrears associated with commercial property or the suspension of dividend income experienced by equity investors. Rents now back or above March 2020 levels and set to grow with wage inflation at 3.5% in 2022, Landlords are beginning to see rental returns akin to the capital returns of the last eighteen months – a real win win!
A Covid trend that may be set to stay is the increased formality around booking a viewing which encourages focused decision making by both letting and sales applicants. This practice has seen viewing to offer and viewing to deal ratios improve significantly, increasing office efficiency and enhancing the customer viewing experience.
