Unpopular Opinion: (Bits of) London Property Values have Stagnated for a Decade

[nonoreen]

Everywhere you look, the tale is always "property prices up!". I am sure that this is true for the vast majority of the country and for many parts of London. Of course it will depend on the property type too.

But from where I am writing and from the experience of many friends working in the City. Flats in Zone 1 and Zone 2 have essentially stagnated in value over the last ten years.

Looking at the sold data for my Georgian terrace (all flats) and streets across Central London. Flats sold for 600k in 2013 are now selling for 620k.

To be fair I think most London areas have fallen in value over the last year. Some by nearly 20%!! and some by just a little or not at all. Hackney and Brent both actually had a very small increase whilst Westminster fell massively. The average across the area as a whole is 5% down year on year. I would guess falls will again be similar going forward for 2024 to 2025. Unless of course we go back to very low borrowing costs - which seems unlikely. Many people believe interest rates have now just normalised and won't change a great deal. Might decrease a bit but not significantly.

https://www.standard.co.uk/homesandproperty/property-news/london-house-prices-ons-february-2024-b1152149.html

Flats, definitely. Friends recently lost 100k on an NW1 property sale. They were shocked, thought it was a sure thing when they bought it a decade ago.

It's not unpopular opinion though, it's pretty much fact. Different property types and areas will appreciate at different rates and overshooting over and under is possible.

If you look further out on the timescale it's not exactly a hard luck story though as London property greatly went up after the GFC relative to the rest of the country, who caught up much later.

The pandemic also strongly shifted to favour houses instead of flats. Looking at colleagues sales at the time a zone 2 flat was going for more than a house in zone 4 7 years ago, fast forward to today and the flat has gone down in value and the house has gone up.

The pits are those new build flats which I think peaked in the second half of last decade, fuelled by HTB, low interest rates and favourable landlord terms, none of which are around today. Very difficult to sell but very easy to rent, I know several people who cannot/will not take the loss and are 'accidental' landlords instead.

Of course the average price indice doesn't show these trends as much, as those flats that get rented instead never make the stats.

it is what many young people are hanging all their hopes on, so I wouldn't call it an "unpopular opinion"

I agree they definitley have. We sold a flat in zone 4 SE london in 2017 and it’s just sold again for 5k less. We made a small profit as we completely renovated it but I don’t think flats are an ‘investment’ any more if you buy. Not sure that’s a bad thing either tbh.

" Not sure that’s a bad thing either tbh."

Completely agree, prices had got way too far ahead of earnings.

Actually apart from the south a lot of places haven't even gone up by inflation, let alone taking mortgage costs into account.

There are places though where prices have gone up hugely.

For my house, it was sold for x in 2004, was sold for 1.05x in 2006, 1.15x in 2019 and is now worth approximately 1.4x in 2024.

Over the same period using the bank of England inflation calculation x would have been worth 1.75x (2004 to 2024).

So the house price increase has vastly underperformed the inflationary increase.

I believe this is the case for much of the midlands and the north.

There are new build flats near me that are still selling significantly under their 2005 sale price.

The real period for house price increases was from the last crash (around 1990) to 2005. Prices went up hugely during that period.