As we enter a new year, 2023 holds many possibilities and we can look back on 2022 as a year that confirmed that even with political and economic global difficulties that the Prime Central London residential property market remained strong.
Presently we have rampant inflation which the government is putting procedures in place to control, resulting in the rise of interest rates jumping to 6%.
However, over the last 30 years Freddie Mac (the main industry source for mortgage rates) has been keeping records since 1971 and between April 1971 and December 2022, 30 year fixed rate mortgages averaged 7.76%.
Whilst we get used to not having available historically low interest rates maybe we should put in perspective the cost of financial borrowing.
There is no doubt the increase in interest rates will put pressure on some vendors and create opportunity for buyers. The reality is that it will have minimal impact in Prime Central London.
Plaza Estates can report through the pandemic period we transacted a greater amount of business than the Brexit years and 2022 proved to be even more successful than 2020 and 2021. This was fuelled by a weak pound in the second half of 2022.
So what will 2023 bring? Well, we all have a little less money as the cost of living bites with higher inflation.
But the pound remains unnaturally weak against other currencies and money in the bank is being eaten by inflation.
When high inflation bites, people look to the historic safe havens, property and gold, especially with the volatility of equity markets. Investors really should look no further than the Prime Central London residential property market.
One of the reasons to do this is we have seen rental prices increase by 30% over the last 3 years and if there remains a shortage of stock prices will only continue to rise. As rental prices rise and stock levels remain low, many people who would automatically turn to rent may look at the option of actually owning a flat. This would give them the option to rent the property in the future and with estimated reports of capital growth from 2024, this may look as an attractive option.
We do feel that the beginning of the year will start more slowly than 2022 as people take stock of the financial implications of global high inflation.
Positively, we have already seen a strong appetite from applicants enquiring about their options when investing in the property market and we are being invited into a number of properties to provide market valuations on behalf of vendors which is extremely encouraging.
If you wish to discuss confidentially listing a property for sale or buying a property, we will be pleased to speak with you.