5 Reasons Why Now Is A Great Time To Buy Property In London
Thu 21 Apr 2016
If you're considering the purchase of a property in London this year, we thought you'd enjoy our top five reasons why now is a great time to buy...
1. Capital growth and rising rents
Capital returns on London property are undeniable. According to a report from Nationwide, London house prices are up 76% since the end of 2008, and our research shows that, on average, prices have increased by 45.6% since the start of 2010. Additionally, Marsh & Parsons' latest quarterly report, is forecasting a 5% growth in house prices in the next 12 months - a very reasonable return when you consider other investment classes.
Similarly, rents continue to rise across all parts of London, with a 3% increase in some areas. The average weekly rent in Prime London is now 628 per week and we are forecasting a continuing upward trend for the foreseeable future. It appears that buying a London home, as opposed to renting, is the sensible solution for those lucky enough to get onto the property ladder. This is further endorsed by recent research that states, on average, London tenants are paying an additional 179 per month on rent, compared to a mortgage, for the same property.
2. Interest Rates and Access to Funds
The UK economy is strong, particularly when compared to other European and international cities, and the Bank of England's base-rate remains low. Mortgage products were at their cheapest in January 2015, and have gradually nudged upwards since - a trend we also see continuing. As such, the mortgage brokers we work with are advising new home-owners to fix their interest rate for as long as possible. Also noteworthy is that many new lenders are entering the market and, with over 17,000 mortgage products available, competition is fierce and access to funds is becoming increasingly easy, so there's now a solution for most creditworthy buyers.
3. Government Support
Government intervention to moderate capital growth and foreign investment have been introduced to maximise opportunities for London property buyers. Many are taking advantage of the Government's Help-to-Buy incentive schemes, such as the First-Time Buyer ISA, and as a result, we're seeing many would-be renters taking the plunge into the sales market.
Whilst these schemes are not always helpful for the London market, given the price disparity with the rest of the UK, positivity and activity at the lower end will always aid the wider market, which is good news across the board.
4. Supply vs Demand
Our research shows a marked difference between the Prime Central London (PCL) and Outer Prime London (OPL) markets when it comes to the supply and demand balance. Currently, we have an average of 11 buyers (down slightly from 12 at the end of 2015) in PCL compared to 17 buyers in OPL (up from 14) registered for every available property. Of course, when demand is high, prices increase and we have certainly seen this happening in some areas of London - Clapham for example, has had a 10.5% annual increase with no signs of easing. However, when demand is lower, it can present unique opportunities for buyers and some areas of PCL are presenting excellent value, comparatively, for savvy buyers.
5. Property Hotspots
Regardless of whether you're buying a 'home' or looking for an immediate return on your purchase, all buyers will want to feel secure that their investment has been a wise one. We'd suggest that all parts of London offer a generous long-term gain, but it's true to say that some areas are offering more exciting returns than others. The Marsh & Parsons research team conduct comprehensive analysis throughout the year in anticipation of the 'next big thing' in London and our new office openings are very telling. We have recently opened in Shoreditch, Queen's Park and Tooting; areas that have all had very healthy price rises in the past few years, and our next opening will be in Tufnell Park - an area we'd suggest you keep an eye on!