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Real Estate

How High Interest Rates are Shaping South London’s Property Market


Attention South London homeowners and prospective buyers! High interest rates are dramatically affecting the local housing landscape, from property values to the types of homes people are snapping up.

A Dip in Mortgage Approvals

According to Nationwide’s most recent report, the housing market has been quiet, especially when compared to pre-pandemic levels. In August alone, only 45,400 mortgages were approved for house purchases, marking a significant 30% decline from the monthly averages in 2019. This subdued atmosphere is undeniably influenced by rising housing costs in the capital and the greater South London area.

A Strain on Affordability

If you’re earning an average income in South London, you’ll find that a typical first-time home—after a 20% deposit—will take up about 38% of your take-home pay just to cover the mortgage. That’s a noticeable increase from the long-term average of 29%. So if you’ve been contemplating a step onto the property ladder, these numbers show that caution is required.

Interest Rates: The Silver Lining?

Amidst all the challenges, there’s some potentially good news on the horizon. The Bank of England seems to be loosening its grip, resulting in reduced long-term interest rates that dictate fixed-rate mortgage pricing. This could bring a sigh of relief to those looking to remortgage or buy a property in areas like Clapham, Brixton, or Dulwich in the coming months.

A Shift Towards Smaller Properties

Nationwide also pointed out an interesting trend: homebuyers are increasingly opting for smaller and less expensive properties. In South London, this could mean a surge in the demand for flats, which have seen a comparatively modest price hike of 12% since the start of the pandemic—half the increase recorded for detached homes.

Regional Property Trends

Although the South West has seen the largest dip in property prices at 6.3%, London has shown some resilience, with only a 3.8% annual decline. And within the context of southern England, this makes London the most stable market for now.

The South London Perspective

For us in South London, it’s crucial to understand how these national trends translate to our local property landscape. Whether you’re looking to invest in a flat in Lambeth or sell a detached house in Wandsworth, this data presents valuable insights. Given the increased demand for smaller properties, now might be a great time to consider downscaling or stepping onto the property ladder with a more modest first purchase.

So, South Londoners, whether you’re a homeowner looking to sell or a first-time buyer searching for that perfect property, it’s essential to have your finger on the pulse of these changing market dynamics. Also, drop me a line and pick my brains or use my free online valuation tool to get a ballpark figure!


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