As we reported in the last newsletter, the London property market remains sluggish compared to the rest of the country.
The latest house price index released by Nationwide at the end of September put London at the bottom of the UK table for annual growth, standing at just 4.3% in Q3. This compares with a UK average of 10.3% and is down a full 3% on the previous quarter. However, the London property market is as diverse as the city itself, so it’s important to dig beneath the headline statistics to see how different areas have been faring.
Looking firstly at Prime Central London, the lack of overseas buyers since the pandemic began has depressed prices, especially for flats. According to Savills, prices have increased by only 0.5% over the last year. However, with the easing of travel restrictions there are reports that buyers from some middle eastern countries such as Saudi Arabia, Dubai and UAE are starting to return. PCL estate agents are hopeful that the release of pent-up demand built up during the pandemic will soon start to boost prices.
Move slightly further out to Prime Outer London areas such as Hampstead, Richmond, Wimbledon and Greenwich, and the picture improves. Driven by the domestic market and people’s post-pandemic desire for larger homes with gardens and easy access to local facilities, prices in these well-to-do areas have risen by as much as 10% over the last year. The lack of stock means that many people who would have previously not considered a renovation project are now willing to buy houses that require considerable modernisation. Agents Knight Frank are predicting that prices in POL will rise by nearly 4% over the rest of the year, which is twice the rate they are forecasting for PCL.
The outer suburbs that are also seeing solid price growth. According to the latest Rightmove House Price Index, asking prices in the borough of Barking and Dagenham grew by a table-topping 5.7% over the 12 months to September, with Bromley and Bexley also recording growth of over 4%. These areas are predicted to remain popular as hybrid working becomes the new normal for many workers and commuting times become less important. Savills predict that outer London may see price growth of 25% over the next four years.
Areas tipped as future property hot spots include three areas that are the focus of regeneration projects. The recent opening of the extension to the Northern Line, which links the new housing developments at Nine Elms and Battersea Power Station, has led to predictions that prices in these areas will grow ahead of the London average, with Property group JJL anticipating growth of 25% over the next five years. The desirability of the area will be enhanced by a 14-acre linear park together with shopping and leisure options. Rents are also expected to rise, as professionals and students continue to return to central London and are attracted to the convenience the area offers.
Another area tipped to see heathy price growth is Shepherd’s Bush in west London. London estate agents Foxton’s believe that this is still an undervalued part of London, despite the rise in prices that accompanied the opening of the Westfield shopping mall over a decade ago. The redeveloped former BBC television centre now stands at the centre of a wider redevelopment plan for the area, which includes retail and office space as well as residential property. With the arrival of new White City campuses for Imperial College and the Royal College of Arts the whole area is set to become a thriving and vibrant community.
Finally, although prices have been climbing for the last decade here, Shoreditch continues to be an area where rejuvenation is predicted to continue to sustain price growth. The area has long been well known for its exciting mix of culture, bars and restaurants, which along with its location and transport links has made it one of the most desirable places for young professionals.
The proposed Bishopsgate Goodsyard scheme will add to this appeal. This is a major redevelopment project and will provide offices, affordable workspaces and studios, along with retail space and 500 new homes. A major attraction of the area will be the highline park running along the top of the iconic railway arches.
“The recent opening of the extension to the Northern Line, which links the new housing developments at Nine Elms and Battersea Power Station, has led to predictions that prices in these areas will grow ahead of the London average, with Property group JJL anticipating growth of 25% over the next five years.”