London
Given the recent turbulence in the world economies, property in Central London has been increasingly viewed as a haven by both domestic and international investors. Although the London property market can fluctuate, it has historically followed an upward trend and has performed especially strongly in recent years.
London is the biggest property market in the UK, with the capital city dominating the UK property landscape and holding average house prices that are more than double the UK average. London also has two property sectors, Central London, and Greater London, which includes the commuter belt. Each area has different offerings for the potential investor.
House Prices and Growth in Central London
As it is such a large area, including Central London, Greater London, and the commuter belt, average house prices vary depending on what is included. According to Rightmove, the Central London average price for a property sold in 2022 is £1,345,384, which is 1% lower than last year. For Greater London, the average price is £749,008, which is 3% more than the previous year.
The challenge for most investors when considering London is its affordability, as this can affect the rental yield and return on investment. However, this is countered by the guaranteed appreciation in London due to a chronic shortage of property.
London property values are considerably higher than the rest of the UK, which currently stand at just under £300,000. London prices are therefore more than double that of a typical UK property. Even within London, the average value of London property can be viewed as on the lower end of the spectrum, with affluent London locations like Kensington and Chelsea having considerably higher property prices.
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Private rents across London increased considerably over the last quarter, surpassing pre-pandemic rates for the first time.
The central London rental market is experiencing a lack of supply and increasing demand within both the flat-sharing and prime residential markets as renters are returning to inner London.
House prices in London have risen by 6.9% over the last 12 months, compared to an average increase in house prices across England of 9.6%. As such, house prices in England have increased more in relative terms, by percentage, but less in absolute terms than in London over the last 12 months.
The biggest rises for September 2022 occurred in Brent, up £30,500 (5.5%), Kensington and Chelsea, up £21,000 (1.5%), and Haringey, up £18,300 (3.0%) month on month compared to August 2022.
In October 2022, Savills reported that rents have risen at the highest rate ever recorded in London’s most expensive areas, as renters returning to the capital post-pandemic far outnumber the homes available to let.
Since the end of June alone, rental prices have increased by 3.3% on average, equivalent to an extra £74.48 on a £2,257 monthly rent. A 13.7% annual rise represents an additional £309.21 per month or £3,710.51 per year on the same rent.
