London property market is at a ‘turning point’ says Foxtons


Now is a good time to buy' a property in the capital, says estate agency.

“There is the feeling that in the final few months of this year we are witnessing a turning point,” says London estate agency Foxtons, as the rate of inflation moderates and after the Bank of England held interest rates steady in September for the first time since November 2021.

“At the beginning of 2023, it looked as though the wider UK economy and housing market were beginning to recover from the controversial mini-budget,” explains the firm. “Inflation looked to have peaked, the economy was calmer than expected and forecasts for interest rates had been pared back. Moving forward six months, it’s fair to say progress has been steady, if a little slower than we expected. Inflation and interest rates have risen more sharply than anticipated, making Londoners looking to move or invest more cautious. At the same time, affordability remains a hot topic in the rental market, where limited stock has pushed rental values ot record levels.”

Demand for homes to buy in the capital has returned to “normal” pre-pandemic levels, while rental demand continues to outstrip supply by some margin.

It’s “a good time to buy” in London, declares the estate agency, arguing that “rising rents and softening house prices mean that, for some, moving into home-ownership is an appealing alternative to renting.”

In the first half of 2023, the average price of a one-bedroom flat in the capital was just over £352k (Land Registry), while the average rent was £1,767 (Dataloft). Doing some sums based on these figures and assuming a 24% deposit, Foxtons estimates that mortgage rates would need to rise to 6.5% before renting became cheaper than buying.

“We are starting to see a more stable market emerge with many lenders cutting the pricing of their fixed rate products, comments Tom Davies, Managing Director of Foxton’s mortgage arm, Alexander Hall.

London’s lettings market “remains busy and highly competitive”, with Foxtons registering 18 prospective tenants for every property listed for rent in the first half of the year.

Supply is beginning to improve, though, with 6.4% more new listings in Q2 this year compared to Q2 2022. Pressure on rental prices is “moderating slightly” as a result, and “a more normalised seasonal market” is emerging.

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