As we move into autumn things are set to move up a gear and property in the £1million bracket in particular is looking buoyant. Not only is a stable economy that is showing nominal growth giving investors more confidence, but the projected increase in population in the London area is also a determining factor in driving up demand for both prime property, sub-£1million homes and apartments too.
New interest in desirable postcodes
Analysts are predicting that areas bordering popular prime markets, particularly in the east and west of the capital, are now garnering a stronger interest in those keen to expand existing property portfolios. Those who are new to the market but want to get a foothold in the highly desirable and profitable London market are also starting to gravitate towards areas such as Hammersmith in the west, and Vauxhall and Battersea in the south. The east of the capital, in particular Canary Wharf and the E14 area, remain predominantly prime markets with a limited supply of £1million properties, which because of the highly desirable nature of the area, tend to sell very quickly.
More first-time buyers
“We are seeing a steady influx of new investors in London property, especially in up and coming central areas both north and south of the river,” comments Joel Brookes from property experts Vanet. “We’re also noticing that more of these investors are first-time London purchasers, who while they may have property elsewhere in the UK, are now starting to see London as an affordable option. It’s not a case that property prices have gone down, rather that investors have more capital to spend, whether they’re looking for a single unit or multiple investment properties to expand an existing portfolio. The buy-to-let market is particularly strong right now, especially around the Isle of Dogs" he adds.
One aspect of the London property market that analysts are starting to question is the sustainability of the current levels of growth, particularly among the prime areas to the east of the capital. While numerous projects are now underway to develop the E14 area, there is a limited amount of land available, and the current infrastructure is struggling to meet the demands that high levels of development will put upon it. The Crossrail scheme may go some way to alleviating this issue, but it won’t solve the problem entirely.
It is also important to retain the ‘character’ of an area, so developers are going to have to become more imaginative in their designs as investors look not only for square footage, but the ‘wow’ factor as well. A neighbourhood is as important in selling a London property as the number of bedrooms, so it may be that we start to see more re-developments alongside more sympathetic low-level schemes. In highly urbanised areas such as Canary Wharf, multiple occupancy developments will still head skyward, but further out we may start to see a greater diversification of property styles. This could actually be a benefit when it comes to attracting investors looking for buy-to-rent properties, as having a range of styles in their portfolio may encourage a more diverse mix of tenants, from young families through to single professionals.
New clients coming into the market
While the current housing stock is relatively stable (and somewhat limited in certain parts of the capital), a new influx of potential buyers could kick-start what has been a relatively soft market this year. The Council of Mortgage Lenders have reported that there has been a 9% growth in the number of mortgage offers during July, indicating that lenders are more optimistic about the market in general, and clients’ ability to meet their mortgage commitments. The same report also confirmed that the buy-to-let market continues to grow, mainly driven by buy-to-let remortgage activity.
Strong growth to the west of the capital
While focus remains on the prime areas of Canary Wharf and the E14 postcode, West London is starting to show strong signs of growth too. Hammersmith and heading west to Ealing are doing particularly well, showing average property values increasing by 4.1% in the second quarter of 2015, leaving annual growth at 0.5%.
“The market in London property is recovering after a soft spell, and with a new generation of buyers looking for property of all kinds, now is the time for sellers to bring their properties to market,” comments Joel Brookes. “Landlords too are finding that their properties are generating good returns, with most rental properties spending very little time vacant. The market is returning to form, and at Vanet we expect to see this slow-but-steady trend upwards continue through the fourth quarter of 2015 and into the first quarter of 2016,” he concludes.
|All figures and quotes are accurate at the time of publishing|