In the last year, the property market in London has been very fragmented. Certain areas have outperformed others considerably. According to data from the Land Registry, London property prices have increased by 7.27% (year to March 2017) but be careful with statistics.
One area is always doing better than another. This is why employing a property finder who experiences market trends first-hand can pay dividends in the long run.
Looking at the table below, you will see that at present, the higher growth areas in the past year have been more on the outskirts of London where there are more affordable price levels.
The current trend, in many ways, is based on affordability – the less expensive areas have had higher growth. There is a direct correlation between lower price and growth.
Stamp duty no doubt has played its part in calming the upper end of the market. This is one reason why Kensington and Chelsea and City of Westminster have had hardly any growth in the last year.
|Area||% Increase year to March 2017||Average Prices|
|Kensington & Chelsea||0.54||£1,342,561|
|City of Westminster||0.23%||£1,015,855|
|Hammersmith & Fulham||3.84%||£744,287|
(Data from www.landregistry.data.gov.uk)
The weak pound (Sterling) has now been trading around 1.20 – 1.28 post Brexit which is a historic low against the dollar. It is down too against most other strong currencies.
Compared to a year ago, this is saving of around 20% on a property. Yes Article 50 will be triggered tomorrow but we have known this for some time now and therefore, in my opinion this element must be priced in to a certain extent. In fact, the pound has strengthened a little in recent weeks against the dollar which can be accredited to Mr Trump’s troubled start to his presidency.
If you are thinking to buy a property in London, I believe now is a perfect time to get ahead of the competition though take my advice and remember:
The type of property is important also.
Buy a unique property.
This may sound obvious but I see so many international buyers buying new builds off-plan. Purchasing an existing period style property, which is unique and probably priced less per square foot than a new build can often be the much wiser choice.
Sure, it is easier to buy a square block in a building, it’s new with a long lease, but a future resale could be more problematic. Often, the “cut and paste” new builds do not stand the test of time. Ask yourself: “Will this building weather as well as a period conversion or red brick mansion block that has been standing for over 100 years?”
If you are buying to let, these new builds will all hit the market at the same time, you’ll be competing with everyone else in the building to find a tenant.
Likewise, if you need to sell, your product will not stand out against others.
So, I advise my clients to aim for established areas with characterful features.
Where to buy now then? My opinion:
As with all investments, past trends should act as a guide only, and this is why I will contradict the above a little here.
Think about an IPO launch and ask yourself, “who makes the most money?”
Is it the investor who buys at the launch or the shrewd investor who gets in pre-launch? Yes people feel more confident buying in a rising market but they have then already missed out on a lot of the growth.
So, I would suggest focusing on property price levels between £800,00 – £1M in central areas.
Confidence is gradually coming back to the market and with supply still outstripping demand in this price bracket, there are still great buying opportunities for the shrewd investor. Yes, the market is being squeezed but I feel that a lot of the growth in the outer areas of London may have already passed.
If you would like more detailed advice, feel free to email me at firstname.lastname@example.org