1

London Residential market updateKaty Warrick, Savills Residential Research

July 2021

2

London’s future after Brexit and a global pandemic

Trade deals

agreed with

Japan and

Australia, with

more to comeBusiness

environment

stands strong

and still attracts

the biggest

names

Ready-made to

adapt to the

‘new normal’

London’s

fundamentals

means it still

offers long term

stability

Source: Savills Research using RCA, excluding development sites, Dealroom.co 3

London comfortably leads the world in cross-border investment

Cross border investment (year to Q1 2021)

1.London: $13.6bn2. Paris: $9.5bn

3. Amsterdam: $6.2bn

0

2

4

6

8

10

12

2016 2017 2018 2019 2020V

en

ture

ca

pita

l in

ve

stm

ent in

L

on

do

n (

$b

n)

London is Europe’s global tech city

Source: QS World University Rankings 2021, UCAS 4

The world’s best university offering

0

50

100

150

200

250

300

350

400

0

1

2

3

4

5

QS

Wo

rld

Un

ive

rsity

Ra

nkin

gs; co

mbin

ed

sco

re in

to

p 5

0

Nu

mb

er

of u

niv

ers

itie

s in

to

p 5

0

Combined score in top 50 Number of institutions in top 50

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2015 2016 2017 2018 2019 2020 2021N

um

be

r o

f U

CA

S a

pp

lica

nts

China Hong Kong India

United States of America Singapore Malaysia

Other (not EU)

A resurgence in activity led by the market between £500k & £1m

5

0%

50%

100%

150%

200%

250%

Mon

thly

ag

ree

d s

ale

s v

201

7 –

20

19

avera

ge

Greater London

Under £300k £300k-£500k £500k-£1m £1m+

A reassessment of housing needs given the experience of lockdown

Low price growth in the run up to the pandemic

Low interest rates

Government support for jobs and earnings

A stamp duty incentive

Source: TwentyCI

6

Housing market drivers

….which a Mortgage Guarantee

Scheme may struggle to penetrate

Furlough and stamp duty extensions

mitigate short term risks Expectations

that interest rates will stay

lower for longer will underpin prospects for house prices

Vaccine roll-out and easing of

social distancing

mean falling unemployment

levels in H2

Though a gradual return

to the office will ease the “rush to the country”The prolonged

period of lockdown will

embed some of the perceived need for more

space

But London still has a huge affordability challenge…

There isn’t currently the

same shortage of stock

available to buy in London

Source: Savills, Nationwide, Oxford Economics* 7

Mainstream Housing Market Outlook

2020

Actual2021

UK House Price Growth

7.3% 9.0%

London House Price

Growth

6.2% 7.0%

GDP Growth (whole year)* -9.9% 7.9%

Unemployment (at Q4)* 5.5% 6.0%

Bank Base Rate (at Q4)* 0.10% 0.10%

Source: Savills, Nationwide, Oxford Economics* 8

Mainstream Housing Market Outlook

2020

Actual2021 2022 2023 2024 2025

5 years

to 2025

UK House Price Growth

7.3% 9.0% 3.5% 3.0% 2.5% 2.0%

21.5%

London House Price

Growth

6.2% 7.0% 2.0% 1.5% 1.0% 0.5%

12.4%

GDP Growth (whole year)* -9.9% 7.9% 2.9% 1.5% 1.4% 1.6%

Unemployment (at Q4)* 5.5% 6.0% 4.6% 4.0% 3.7% 3.6%

Bank Base Rate (at Q4)* 0.10% 0.10% 0.10% 0.10% 0.3% 0.5%

Source: Savills using Land Registry 9

Brent and London have seen significant long-term price growth

10 year growth

London

+72%

Brent

+67%

South East

+52%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jan

-20

05

Jun

-20

05

No

v-2

005

Apr-

200

6

Sep-2

006

Feb

-2007

Jul-

20

07

De

c-2

007

Ma

y-2

008

Oct-

200

8

Ma

r-20

09

Aug-2

009

Jan

-20

10

Jun

-20

10

No

v-2

010

Apr-

201

1

Sep-2

011

Feb

-2012

Jul-

20

12

De

c-2

012

Ma

y-2

013

Oct-

201

3

Ma

r-20

14

Aug-2

014

Jan

-20

15

Jun

-20

15

No

v-2

015

Apr-

201

6

Sep-2

016

Feb

-2017

Jul-

20

17

De

c-2

017

Ma

y-2

018

Oct-

201

8

Ma

r-20

19

Aug-2

019

Jan

-20

20

Jun

-20

20

No

v-2

020

Pri

ce v

s 2

00

7/0

8 p

eak

Ealing Brent London South East

Ealing

+67%

10

£486kAverage

value HA0

£579kAverage

value Brent

£667kAverage

value London

Source: Savills using Land Registry

11

£817kAverage value W5

£602kAverage

value Ealing

£667kAverage

value London

Source: Savills using Land Registry

12

Wembley

White City

North Acton

Ealing

A very different story in the rental market

13

Private renters more exposed to economic pressures

Less need to be in London among younger sharers

Reduced demand from corporate relocation and overseas students

Increases in available stock from the short term rentals market

Rightmove Rental Trends Tracker (based on asking rents)

As at Q1 2021 Quarterly Annual

Inner London -1.0% -14%

Outer London -0.3% -1.1%

14

Inner London has seen the largest rental falls

Source: Zoopla powered by Hometrack

15

Tenant demand ticks up for the first time since last August

Source: RICS, Zoopla powered by Hometrack

-100

-80

-60

-40

-20

0

20

40

60

80

100

-10.00%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

RIC

S B

ala

nce o

f O

pin

ion

Ann

ua

l re

nta

l gro

wth

Tenant demand Annual rental growth New landlord instructions

Source: Savills Research 16

London rental growth will outperform the UK

2021 2022 2023 2024 20255 years to

2025

UK rental growth

+0.8% +4.5% +3.7% +3.5% +3.5%

+17.0%

London rental growth

+1.5% +5.5% +4.0% +3.5% +3.5%

+19.3%

Has Covid changed what buyers are looking for?

Source: Savills Research Client and Applicant Survey March 2021

57% 39% 38% 35% 18% 14%

31%

63%

35%

21%

18%

32%

0%

10%

20%

30%

40%

50%

60%

70%

Park/ open space Train/ tube station Shops/ local amenities Family School(s) Place of work

Pro

po

rtio

n o

f L

on

do

n r

esp

on

de

nts

wh

o r

an

ke

d a

s 1

or

2

Now Prior to Covid-19

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Location and travel Working from home

Priorities within the home Sustainability

Thank you

© Savills 2021

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