TPP223: What is happening to the London property market

This week we're focussing on a topic discussed regularly - what's happening to the London property market?

So, what's happened over the last 8 years?

• London prices have grown 80% over 8 years (since 2009)
• Every price band has increased by roughly the same percentage...BUT timing differs
• Top 30% recovered from 2009-2012. Driven by overseas buyers and domestic residents who didn’t need mortgages or could get them more easily
• Lower sectors only grew strongly from 2013 onwards. Driven by ripple effect, confidence, access to finance
• (This is why it’s best to own prime assets. They grow first and further - because growth is a % of a larger number)

 

What’s happening now?

• On average, 5% annual growth makes it one of the 5 slowest growing cities in the UK
• Many of those who are selling are moving out of the capital. “Almost half the agents in London surveyed by LonRes say that 10 per cent or more of their vendor clients intend to quit the capital once they sell their property”
• Rents are falling. “New tenants in the capital typically paying almost £100 a month less than their counterparts a year ago, according to Your Move”.
• Transactions are very low, and at an all-time low in 3 boroughs.

 

What have we learned from the London property market?

• Just because an area has performed best doesn’t mean it will continue to! This is why we’ve said to avoid London for the last few years - poor yields AND low growth
• Prime assets are more volatile - both grow and fall first and fastest. You can either use this to your advantage or stay out of the way!
• When you tax something you get less of it. SDLT has had a major effect on London transactions
• Property isn’t immune to market forces. Rents and prices can’t grow ahead of incomes forever. Affordability in London is ridiculously stretched, so if it stagnates (real terms fall) and we see wage growth, affordability can come under control without a major correction

Want to take a further look at all the data? We got a lot of our information from the following links:

• This Hometrack study  that splits London property into deciles by price 
• This report  on how London vendors are leaving the Capital.
• This article in The Guardian that talks about rents falling in London. 
• This article which discusses transaction volumes in London.

 

News story of the week: New BTL mortgage options for ex-pats.

We've heard quite a bit about Vida in the past few weeks, and their proposition seems to be pretty good. If you're an ex-pat investor, you may want to check them out. Read more here.

Resource of the week

Make your clipboard work harder! This keeps your clipboard history which is a huge time saver. Check out Jumpcut for Mac, Clipboard History 2 for Chrome, or this option for Windows. 

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