The City of London is facing a dramatic drop in property values, leaving investors and homeowners questioning the future of this once-thriving residential hotspot.
After years of steady growth, with property prices rising 40.5% between 2013 and 2022, the City, located in London’s financial district, has seen a sharp reversal, the Wall Street Journal reported.
Sales prices in the area have fallen by more than 10% in 2024 alone, far outstripping the modest 2.5% decline seen in inner London over the same period.
The city “has really died a death,” Tom Kain, a purchasing agent with Black Brick, told the Journal. “The whole environment where people worked long hours in the city and wanted an apartment there is just not what people do anymore.”
For nearly two decades, the city was a beacon for property investors.
The completion of The Heron, a landmark luxury residential development in 2013, transformed the area from a purely commercial center to a desirable residential enclave.
Developers rushed to cash in, launching high-end projects like One Bishopsgate Plaza and adding a new wave of trendy restaurants and bars to attract well-heeled professionals.
But the rise of remote work, changing buyer preferences and rising interest rates have cooled demand.
“People are more open to traveling if they only have to be in the office a few days a week,” Nick Verdi, a director at Savills, told the Journal.
“And at the same time, there is certainly more supply. A lot of stock has built up in the last 10 years.”
The result is a buyer’s market, where homes that once sparked bidding wars now struggle for attention.
“When I started, you could literally put a property on the market on a Friday, book in 10 viewings over the weekend and agree a sale on Monday,” Karl Graham, head of sales at John D Wood & Co . told the newspaper. “Now it is the opposite. You have five properties for each buyer.”
Peter Brewer, a semi-retired hedge fund manager, is one of many homeowners caught up in the city’s property slump.
In November, he listed his six-bedroom condo for $5.02 million, hoping to turn a profit after a decade of ownership.
“Given the amount we paid for the flat and invested in renovating it, I would expect to put it at £5 million ($6.25 million), not £4 million ($5.02 million),” he said. Brewer hoping for a beauty. significant rise after 10 years, but it is not so.”
Despite the city’s luxury appeal, the neighborhood’s rising prices have eroded its competitive edge.
“While prices have risen, it has caught up with some of the most traditional and desirable residential areas,” Kain said. “People would rather live in Mayfair or Marylebone. When it represented value for money, it made more sense.”
The city’s challenges extend beyond falling prices. The shift to hybrid working has significantly reduced the number of daily commuters, with weekday journeys into the city falling 21% between 2023 and 2024, according to the Virgin Media O2 Movers Index.
Institutional demand has also faded.
While some companies, such as Goldman Sachs, have pushed for a return to the office, others, including the Bank of England and Lloyd’s of London, allow flexible schedules that keep workers at home for most of the week.
The 5,000 employees at the Bank of England, for example, only have to spend 40% of each month working in the office.
Along with tax changes that have made property investment less attractive, the city is struggling to maintain its momentum as a residential hub.
While some buyers, like 29-year-old Jocelyn Ho, still see value in the city’s central location and convenience, many others are looking elsewhere.
“I really like the area,” Ho said at the exit of her latest purchase at The Haydon, a new luxury development. “It’s really affordable, it’s safe for a single woman, and the transportation is great. I do a lot of activities after work, so I want to live in a central area.”
However, for sellers like Brewer, the city’s declining fortunes underline a wider reckoning for London’s property market.
As prices slide and competition increases, the days of easy profits seem to be over.
“It’s a buyer’s market now,” Graham said. “The property will only sell if it is reasonably priced”
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