London Real Estate: Shifting from Heat to Balance

Home prices are dropping and fewer sales are taking place in London's housing market as interest rates rise. But there's much more to the story. Realtor Vicki Zavitz from Century 21 First Canadian Corp. notes that in 2024, homes are taking an average of 19 days to sell—a drastic change from the mere seven days it took in 2021 and 2022. She suggests that we are just returning to a more 'normal' market, where properties typically stayed on the market for about 30 days.

While sellers might long for the days when their homes sold almost instantly, the current market's longer sale times are part of a broader shift. Sales figures show that the dream of owning a detached, single-family home is becoming less attainable for many in London. From January to July 2024, 3,731 family homes were sold. While that's a slight 2.8% rise compared to the previous year, it's a 36.6% drop from 2021 and 8.8% lower than 2014.

Interest rates are the primary factor affecting the market, but everyday expenses like food and dining out are also making it harder for potential homeowners to save and invest in property. Drew Johnson from Coldwell Banker Power Realty emphasizes how rising costs across the board are creating a more cautious consumer base. The impact is clear: high costs are driving people to rethink large investments like buying a home.

In July, the London-St. Thomas Association of Realtors fell into what is technically a buyer's market with a sales-to-new listings ratio of 39%. A balanced market typically falls between a 40% to 60% ratio, according to the Canadian Real Estate Association. Johnson notes that part of this dip is due to the seasonal slowdown that hits in the summer and the increased number of homes now available for sale. July is traditionally the second slowest month of the year, only slightly busier than December.

Despite a dip in some areas of the market, the high-end real estate scene in London remains strong. The market for homes costing £5 million or more saw 526 transactions in 2023, which, although lower by 13% compared to 2022's record year, still sits higher than any year from 2013 onwards. These high-value properties generated a total of £5.7 billion, with those exceeding £10 million making up £3.2 billion of the total.

Cash and international buyers are keeping this top-end segment vibrant. The traditional prime locations of Chelsea, Kensington, Belgravia, Mayfair, and Knightsbridge see the most action, bolstered by a resurgence in international travel and a renewed interest in the London lifestyle. While the looming general election could keep prices stable for now, experts forecast a 3.5% price increase in 2025 and 6.0% in 2026.