London’s Property Market Shows Signs of Stabilisation with Modest Demand Increase

Recent data from Foxtons, London’s leading lettings and sales agent, highlights a nuanced shift in the capital’s property market with a moderate rise in demand and a significant influx of new listings. This trend indicates a move towards a more stable market environment following the unusual patterns of the past two years.

Rebound in Demand and Adjusting Supply
Foxtons’ latest report shows a 9% increase in applicant demand from February to March, although there is a 14% decrease compared to the same period last year, suggesting the market is aligning with more typical trends. South London emerged as the hotspot for applicant demand, witnessing nearly 17,000 applicants—an 18% increase over Central London, the second-most in-demand area.

Despite the positive uptick from February, the year-on-year comparison shows a slight decrease in the number of new renters per new instruction, dropping to 14 applicants per instruction in March. East London, however, experienced a notable 23% increase, indicating a localised surge in demand.

Financial Trends and Budget Insights
Budgets for properties have continued to trend higher than in previous years, with a modest 3% increase in 2024 over 2023. As demand picked up from February to March, budgets also saw a slight increase. Central London commands the highest budgets, averaging £579, marking a 2% increase from last year.

Despite an overall increase in new instructions during January and February of 2024, March saw a cooling with only a 2% year-on-year increase. However, the first quarter of 2024 still recorded a 15% increase in new instructions compared to the same period in 2023, suggesting a significant willingness among sellers to engage with the market.

Regional Rent Trends and Expert Opinions
From a regional perspective, rent trends varied, with North and West London seeing increases of 3% and 5%, respectively, while Central London experienced a 5% decline. Gareth Atkins, Managing Director of Lettings at Foxtons, commented on the broader market implications, “Inflation has dipped to its lowest point in two and a half years, with interest rates expected to follow. This should give buy-to-let landlords the green light going into Q2.” He also noted that the increase in sales stock, now at an eight-year high, is intensifying competition among sellers, potentially influencing landlords considering sales.

Richard Merrett, Managing Director of Alexander Hall, highlighted developments in the mortgage sector: “With the Base Rate remaining stable and with considerably less volatility across Q1, we have seen some positive moves in the mortgage market. The two largest buy-to-let lenders have dropped rates, Coventry and Skipton have improved affordability assessments and one of the largest mutuals has launched a Limited Company BTL proposition.”

This blend of stable demand, increasing supply, and supportive financial conditions suggests that London’s property market is gradually finding its equilibrium, offering opportunities for both renters and investors as the city heads into a potentially busier summer period.