London property market round-up 2015: emerging homes hotspots for renters, first-time buyers and commuters

This was the year that the suburbs struck back as Londoners continue to seek out cheaper areas to buy and to rent.
The next big thing: build-to-rent schemes are taking off. The former 2012 Olympic Games athletes’ village, pictured, now called East Village, is leading the way with developers offering long leases and round-the-clock on-site concierge and management to compete with the growing private rentals sector
Ruth Bloomfield4 January 2016

After four years of boom, prime central London house prices have begun to wobble as increased stamp duty prices deter both UK and foreign buyers.

Russians have all but vanished thanks to the devaluation of the rouble — plus sanctions imposed against the country during the Ukrainian crisis — and China is preoccupied with its own troubled market.

Savills forecasts that next year will bring marginally better news, with prices holding steady, followed by two per cent growth in 2017, and a moderate five per cent increase in 2018.

£399,950: a one-bedroom flat in Muswell Hill (Prickett & Ellis; 020 8012 1060). North London suburbs boomed this year, with Zone 3 house price growth outperforming central London

Giles Hannah, senior vice-president of Christie’s International Real Estate, believes Chinese buyers will start flocking back to the capital because it has become easier for them to obtain UK visas.

Agents say homes under £1.5 million are selling — there is always a reason why Londoners have to move — but above that price sales are sticky. Clever buyers have walked away from prime central London to seek better investment growth in “key emerging zones” such as Nine Elms, Paddington and King’s Cross, with the Gasholders development at King’s Cross expected to break records next year.

Revealed: London's top property news stories

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Suburbia strikes back
This was the year the suburbs struck back. A mid-year study by Countrywide and the Office for National Statistics found the top-performing postcode in London was N2 deep in Zone 3. Prices in this leafy swathe of north London have increased by more than £205,000 year on year.

London’s Olympic boroughs have finally experienced their post-Games bounce. Annual price rises in Newham stand at an impressive 12.5 per cent, according to the latest Land Registry data, while Barking and Dagenham managed 12.1 per cent.

But, after stellar growth in 2013 and last year, the Hackney bandwagon has slowed, with annual price growth of 6.2 per cent. The London borough with the biggest year-on-year price increase has been far-flung Hillingdon, 14 miles west of Charing Cross, on the way to Heathrow airport, up 13.1 per cent.

It’s no coincidence that, in a year when the average price of a London home topped £500,000, Hillingdon is currently one of the most affordable places in the capital with an average price of £361,595.

Buyers are seeking out the cheaper zones. It will be worth getting to know Bexley (average price £306,511) next year, while over the next five years, Savills believes the top-performing boroughs will be Waltham Forest and Lewisham. The overriding opinion is that London’s growth is going to be slow but steady. Knight Frank predicts prices will rise by 20 per cent over the next five years.

£450,000: a new three-bedroom terrace house in Coval Lane, central Chelmsford, for sale through Location Chelmsford (01245 930102). Chelmsford and Hertford recorded this year’s biggest commuter belt price growth

Triumph for commuters
Some 63,000 Londoners bought homes outside of the capital this year, according to Hamptons International. Young first-time buyers who’d been renting in London gave up any ideas of purchasing in the capital and moved straight to the commuter belt.

It’s little wonder, since the price gap between London and the rest of the UK has now reached its widest point on record. An average home in London costs two-and-a-half times more than the cheapest areas of the country.

The slowdown of prices in prime London has played a part because families are beginning to realise they have taken the fullest advantage of post-recession price growth and will not lose out if they relocate.

According to research by estate agents Jackson-Stops & Staff, family homes in county towns, in particular, are increasingly popular. Hertford and Chelmsford are enjoying the strongest price rises within London’s core commuter zone.

Hope for first-timers
House of Commons research found that young buyers in some parts of London would need to save for 30 years to get on to the first rung of the property ladder.

Between July and September, the number of loans was down one per cent year on year, according to the Council of Mortgage Lenders. High prices and big deposits were to blame, with average deposits in the capital hitting a record £72,000 this year.

Chancellor George Osborne’s Autumn Statement offered a helping hand to first-time buyers in the capital. Under the London Help to Buy scheme, they will be able to borrow up to 40 per cent of the value of a new-build home from the Government, and will only need a five per cent deposit. Plus, the extra three per cent on stamp duty for buy-to-let homes should help to reduce the competition for starter flats.

Renters stretched
Cash-strapped tenants are converting living rooms into extra bedrooms to get sharers in and ease the cost of renting, according to David Orr, chief executive of the National Housing Federation.

Tom Copley, Labour’s London Assembly housing spokesman, calculates that by 2020 the city’s average rent — currently at £1,560 a month — will hit £2,007 per month.

Big splash: the 90ft-high sky pool planned for Embassy Gardens in Nine Elms

Renters are becoming commuters, taking advantage of lower rents in suburbs and “nearby” cities such as Brighton and Oxford.

It is predicted that there will be more build-to-rent developments. These include East Village, the former Olympic athletes’ village at Stratford, which is already up and running.

Developers are promising renters longer leases, more professional management than private landlords, greater security and on-site “extras”, such as roof gardens and cinemas.

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