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.
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| flickr.com/photos/zongo/18905784104/ |
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.
