Is it worth investing in London property? | #CP

The property market in London has changed a lot in recent years. Back in the 1990s, property in London averaged prices of around £115,000 with the potential for fantastic returns. Fast forward to 2018, however, and investors in London property can expect to pay around £671,412 — a figure that continues to increase year on year.

While the value of house prices in London increasing may be good news for those who purchased property many years or decades back, things aren’t looking promising for those seeking a new investment. Rental prices have plummeted in London in recent years, with a 1.12 per cent year on year decrease resulting in some low average rental yields. Rental yields in London average around 3.7 per cent, which is significantly less than in other UK cities like Liverpool and Manchester who boast yields of 5.0 to 5.5 per cent.
But what is causing this shift in the capital’s property market, and is it still worth investing in London property? One major reason for this is the cost. Investing in London property is a lot more difficult for those with a lower budget, with those up North being able to get far more for their money than if they buy property in London. In Liverpool, for example, you could buy a six-bedroom house for £500,000, whilst the same price in London would only get you a two-bedroom apartment. Take rental yields into account and it’s not hard to see why the Northern property market is thriving in comparison to London.

With around 50,728 properties available for rent in London, the city’s property market is becoming over-saturated and demand is dwindling, dropping to just 27 per cent in 2018. The areas of London that are seeing the highest levels of demand are those in more affordable boroughs of the city. With more young professionals reportedly leaving London and heading up North, there’s likely to be fewer people prepared to spend big money on rent in the city, resulting in this surge of demand for cheaper rental properties.

Whilst property investment isn’t looking good in London as a whole, there are some up and coming areas that are expected to bring new opportunities in the future. Areas like Shepherd’s Bush are said to have a lot of capital growth potential in store, with the creation of new business opportunities and leisure attractions set to bring new interest. Other areas in London such as Earls Court, Canary Wharf and Croydon are also predicted to experience growth by 2020. However, for those keen to join the property ladder as soon as possible, for as cheap as possible, the best bet is to look up North.

Within Northern Powerhouse cities like Liverpool, Manchester, and Leeds, property investment is at an all-time high. Rates of demand in Liverpool are soaring, with a 181 per cent increase between 2002 and 2015 and the fastest growing city centre population. A large number of young professionals and students are heading to the city each year to take advantage of the rich culture, fantastic nightlife and leisure, and exciting business opportunities available. RW Invest is one property investment company recognising the potential behind Liverpool and Manchester, with a range of buy to let properties available at affordable prices and with yields as high as 9 per cent. For 2018 and beyond, those interested in investing in UK property should look up away from England’s capital and explore other options elsewhere.

Karl Young

Part-time daddy and lifestyle blogger. Father of 2 boys under 2. Golfer, scare-fan, tea-lover, traveller, squash and poker player. I write on the @HuffPostUK