The London property market is still going strong, as homebuyers continue to borrow in order to fund their purchases, according to the latest mortgage lending data from the Council of Mortgage Lenders (CML).
In the first quarter (Q1) of 2016, homebuyers in the capital borrowed £7.1 billion for house purchase, up by 6% over the quarter and 41% annually. This equated to 21,400 loans, which was down by 2% on the previous quarter, but up by 20% compared to Q1 2015.
First time buyer borrowing was down over the quarter, by 7%, but up by 19% when compared to Q1 last year. This type of buyer borrowed £2.9 billion in the form of 10,700 loans – down by 10% quarter-on-quarter, but up by 3% on the year.
London Property Market Still Going Strong as Homebuyers Continue to Borrow
Those moving home borrowed £4.2 billion in Q1 2016, up by 18% on a quarterly basis and 63% compared to last year. Some 10,600 loans were approved for home movers, up by 8% on the previous quarter and 43% on last year.
Remortgaging activity totalled £4 billion over the same period, up by 4% on Q4 2015 and 36% on the previous year. This totalled 13,500 loans – up by 2% quarter-on-quarter and 21% compared with Q1 2015.
The Director General of the CML, Paul Smee, says: “The usual seasonal dip in lending in the first quarter of the year didn’t seem to impact London as strongly as the UK overall, mainly due to a strong uptick in home mover activity. Remortgage lending also performed well, resulting in the highest first quarter remortgage levels in the capital since 2009.
“The housing market in Greater London has some unique characteristics compared to the rest of the UK – more first time buyers, but lower overall levels of homeownership. Affordability and the supply of housing remain critical factors for the London market, and we will be pleased to work with the new mayor and his deputy on how to deliver appropriate strategy over his term of office.”
Estate agent Marsh & Parsons has also recorded growth in the London property market.
In Q1, the firm saw buyer demand increase by 9% annually in prime London, and by 19% in the outer prime belt.
The number of registered buyers for every available property for sale has risen to 14 in Q1, up from 13 buyers in the previous quarter and 12 in the same period last year.
The CEO of Marsh & Parsons, David Brown, comments: “Mortgage lending in London got off to a lively start this year, jumping leaps and bounds ahead of 2015 levels across all sectors. And it’s encouraging to see home movers at the forefront of the pack – at a time when the supply of new housing is dragging its heels, it’s vital that existing homeowners are taking opportunities to sell up and move up the property ladder, freeing up properties at the lower end of the market.
“It’s also a great vote of confidence in the capital. People sell their homes when they recognise strong house price growth and the favourable returns to be made, plus the belief that they’ll be able to find a buyer easily. In London, all these elements are firmly in place. We saw buyer demand increase 9% year-on-year in Q1, with an average of 14 buyers competing for every available property on the market. It’s important in the long-term that first time buyers in London remain similarly assured of the affordability and possibility of climbing onto the ladder.”