THE LONDON PROPERTY MARKET
London is a uniquely valuable residential property market. Historically, the sales market has displayed cyclical characteristics, while the lettings market is more stable. By operating across both markets, but with a greater weighting towards non-cyclical lettings revenues, the Group is well positioned for growth.
London is the UK’s most concentrated property market due to its status as a truly global city and the demographics of its population mean that it has great prospects for growth. Despite only accounting for 13% of the UK's total population, London accounts for 25% of the total UK property market value and over 40% of the UK's total lettings market value. London already faces a shortage of housing stock having built on average just 30,000 new homes each year since 2011. And with London’s population expected to grow by 60,000 people annually over the next 5 years, we expect demand within sales and lettings to remain strong and for prices and rents to remain resilient.
The highly fragmented estate agency sector in London presents a compelling opportunity to drive growth through consolidation. Today, there are over 3,600 lettings agents in London alone, with the top 10 agents only representing a 23% share of the lettings market.
LETTINGS
London attracts people from all over the world to stay, work and study, driving structural demand for quality lets. Lower levels of house purchase affordability alongside the flexibility provided by renting drives growing levels of tenant demand, which is unmatched by the volume of new private landlords entering the market.
These dynamics have created a uniquely valuable market with strong long-term growth characteristics; since 2000 the lettings market has delivered on average 8% growth per annum.
SALES
Key drivers of the sales market, which is cyclical in nature, include property prices, mortgage availability and rates, affordability levels and consumer confidence.
London sales transaction volumes were subdued in 2023 and at levels seen in years impacted the Global Financial Crisis and Covid-19 related market shutdowns. Subdued volume levels were primarily attributable to the higher interest rate environment and a weaker macroeconomic backdrop. With improved stability in the mortgage market, 2024 sales transaction volumes are expected to improve.
FINANCIAL SERVICES
The Group's financial services activities primarily relate to residential mortgage broking. The mortgage broking market is primarily driven by the availability of mortgage products, interest rates offered and the level of demand for refinance mortgages and new mortgages for property purchases.
Whilst the provision of new mortgages is closely linked to volumes in the residential sales market, the refinance business is more recurring and non-cyclical in nature and not dependent on sales market transaction volumes.
