Estate Agent Today: For richer and for Poundland: a tale of two property cities
Thu 25 Apr 2013
Its a tale of two property cities. Londons property boom has radiated out, reaching once-unfashionable parts outside the traditional prime central area, but which are now themselves regarded as prime.
Meanwhile, a council in the midlands has been inundated with offers for homes priced at just 1 each less than half the price of a latte.
According to agents Cluttons, prices are shooting up by 383 a day the equivalent of a return air fare to New York in prime central London, and are expected to go up another 22% over the next five years. According to agents Marsh & Parsons, prime London property prices are performing even better than those in the hallowed central postcodes such as Kensington & Chelsea. In places once regarded as being on the wrong side of the river, prices are now up 12.8% in the last year and by 3.6% in the first quarter of this year alone.
It means that buying a prime central property in Mayfair will no longer command quite such an enormous premium over one that is merely prime in, say, Battersea. Mind you, all things are comparative: the premium is still a massive 43%, albeit down from 47% last year.
Investors looking for best profits are now shifting their search from the prime central postcodes outwards: in Battersea, rents have gone up by 6% so far this year, and the proportion of purchases by investors in prime London has risen from 17% to 25%.
Peter Rollings, CEO of Marsh & Parsons, said: Home owners have seen their equity soar as a result of such significant price growth in the past few years. We are now seeing many of those seizing the opportunity to sell at prices that have recovered and in many cases exceeded the highs of 2007, and then re-invest in the same market, taking advantage of the historically low mortgage rates available due to the Funding for Lending scheme. The average price of a property in prime central London now stands at just under 2m (1,939,534), up 2% since the start of the year and up 9.3% on a year ago. The average price of a prime London property is now 1,357,837, up 3.6% this year, and 12.8% since a year ago. Kinleigh Folkard & Hayward also confirmed the boom and says it has sold 98% of all its instructions in the first quarter of this year in the large south-west region of the City.
Lisa Mackenzie, regional sales director for the south-west London region, said: Throughout the first quarter, we saw unprecedented numbers of buyers across south-west London. Consequently, following the continued shortage of properties for sale, supply has not kept up with demand and we are selling virtually every property on our database within days. She said there is huge competition for properties, with many going for above their asking prices as a result of open days leading to sealed bids.
In total contrast, in Stoke-on-Trent the local council is offering homes for 1 apiece in the run-down Cobridge area.
More than 600 people have so far expressed an interest in the two-bed homes, where the local authority is offering 30,000 loans for essential improvements.