Is Now the Time to Buy London Property?

Is Now the Time to Buy London Property?

After Rates Fall, Has the Risk Really Been Absorbed by the Market?

This article examines how London property risk has shifted as interest rates fall—and who is actually absorbing it.

On the eve of Christmas, transaction volumes tend to quieten.

Over the past two years, what has unsettled many people about London’s housing market is this:
there was no clear, decisive crash—yet almost everyone senses that something fundamental has changed.

Interest rates peaked and then edged down.
Activity cooled for a period, but there was no across-the-board collapse.

Everything still looks intact.
And yet it is hard to explain why the unease has not lifted.

It is not panic.
It is not regret.

Until one question keeps resurfacing:

Has the risk really been absorbed by the market?

Let’s start with a conclusion that is not especially comforting, but is essential.

Falling interest rates do not mean risk has disappeared.
They simply mean risk has changed how it shows up—for buyers and for holders.

If you zoom out and look back over the past three years, this was not a short-term fluctuation.
It was an adjustment phase following a completed shift in the environment.

The Bank of England’s base rate rose from near zero at the end of 2021 to above 5% within three years, stayed elevated, and has only recently begun to edge down.

Directionally, rates are no longer at their peak.
Structurally, however, they remain well above the “low-cost era” most people had grown accustomed to over the past decade.

The environment has changed, but it has not reverted to one where holding costs can be ignored.

If you look closely at what has happened over the past three years, one thing becomes clear:

The market has already paid a price for certain structures.

Highly leveraged investors with fragile cash flow were forced to exit.
Buy-to-let models built entirely on the assumption of permanently low rates were corrected by reality.
Even the belief that prices would rebound quickly as soon as rates fell has already been disproven once.

None of this happened in a single dramatic moment.
Instead, it unfolded quietly and in fragments.

That is why many people feel as though nothing really happened.

But if you were inside the market—rather than just watching headline prices—you would have felt something else emerging.

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When Holding Becomes a London Property Risk

Prices stopped falling, but holding pressure became real.

During 2023–2024, even as rents rose noticeably, mortgage interest for many London investment properties often consumed a significant share of rental income—roughly 40%–60%.
Under high-leverage structures, cash-flow stress became increasingly visible.

There was no panic.
But there was no ease either.

Many owners entered a new state:

They could hold, but it was uncomfortable.

That discomfort is precisely what is easiest to overlook today.

Many properties now look perfectly normal.

By official statistics, London prices have mostly moved sideways or corrected modestly rather than collapsing.
Regional and property-type divergence is clear, but overall indices appear relatively stable.

Prices have not moved much.
The names are still recognisable.

Yet an honest question matters more than appearances:

Is this asset working for you, or is it simply “not causing trouble”?

In a prolonged higher-rate environment, sideways itself becomes a form of risk.

It erodes return efficiency—when long-term returns fall below mortgage costs and inflation, capital is not truly standing still.
It also erodes flexibility—high transaction costs and low liquidity make structural adjustment difficult.

This is not unique to London.

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Why Property Absorbs Risk Differently

Viewed through an asset-allocation lens, this behaviour is easier to understand.

Equities and bonds are liquid; risk tends to reprice quickly.
Over the past year, many major equity indices posted strong gains—a stark contrast to property’s sideways drift.

Property behaves differently.

High transaction costs and low liquidity allow owners to delay repricing.
As a result, risk in property rarely shows up as a sudden crash.

More often, it appears as falling transaction volumes, flat prices, and returns gradually worn away by time.

Property reflects risk slowly.

People often ask what makes London property different from elsewhere.

From an asset-class perspective, not much.

London, New York, Tokyo, and Hong Kong all belong to the same category: real estate.

The real difference is not the city.
It is which risk structure you are buying.

Some properties are sustained by narrative and prestige.
Some by cash flow and genuine usage demand.
Others exchange time for stability.

Risk has not disappeared; it has simply become unevenly distributed.

This shift explains why London property risk today rarely shows up as a price crash, but instead as time, holding pressure, and reduced flexibility.

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Who Is Absorbing London Property Risk Now?

At this point, it helps to reframe the most common question.

Instead of asking, “Should I buy now?”
A more accurate question is:

Will this round of risk land on me?

When people say the market has “absorbed” the risk, it does not mean the market took that risk on your behalf.

Markets do not absorb risk for anyone.

What actually happened is that risk was taken on by different people, at different times, and in different ways.

In this cycle, risk has been absorbed by three groups.

First are those who were already liquidated.
High leverage and fragile cash flow meant they bore price, rate, and liquidity risk simultaneously.
The outcome was direct: forced sales, price cuts, or exit.

Second are those absorbing risk through time.
They can hold. Prices have not collapsed.
But they are paying through time, opportunity cost, and declining return efficiency.
This is the largest—and quietest—group in today’s market.

Third are those bearing risk passively.
Tenants, younger buyers, or owners without liquidity who cannot exit.
They absorb not investment mistakes, but the consequences of structural and policy shifts.

This is not a matter of choice, but of position.

The real divide, then, is not “buy or don’t buy.”

It is this:

Are you actively choosing which risk you are taking,
or passively absorbing risk for others?

The outcomes are very different.

If this cycle can be summarised in one sentence, it is this:

Risk has not vanished.
It has shifted from price collapse to a test of time, patience, and structure.

The ones truly carrying that risk are never “the market,”
but those without options—or unwilling to re-choose.

If what you feel right now is no crash but no relief,
no mistake but no progress,

then you are likely standing in the layer of the market that is currently absorbing risk.

That is not failure.
But it is a position worth recognising clearly.

In this cycle, London property risk has been absorbed unevenly—by different groups, at different times, and in different ways.

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Conclusion

If you need prices to rise in order to feel you “bought right,”
this is not the time to buy.

If you can accept a period of stagnation—or a slow grind—
only then does buying become a real option.

This has nothing to do with whether a purchase is a “need.”
It has everything to do with whether you can live with slowness.

The same applies to investment.

If your return depends on near-term price appreciation,
this environment is not friendly.

Understanding London property risk is no longer about timing the market, but about recognising which risks you are willing to hold.

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Postscript

The following people may be suited to buying now, regardless of whether the purchase is framed as “necessary”:

• Those who do not require price appreciation to validate their decision
• Those who can endure a prolonged period of stagnation
• Those buying structure and lived reality, rather than emotion

As Christmas approaches,
may we all gain a clearer understanding of what we truly need.

—
Ginkgo Advisory