5 Reasons to Invest in the London Property Market
Since the UK began emerging from lockdowns and COVID-19 restrictions, the property market has had a positive response, with reports from after the end of lockdown showing a boom in activity. While previous recessions saw property prices crash, UK developers believe that unlike the recession of 2008, the present-day recession has been driven by a public health crisis, with the government making a conscious decision to shut certain markets down while ensuring that measures were in place to support any affected businesses and individuals.
Along with this, unlike during the 2008 recession, measures have been put in place to help restart the housing market. This has led to a number of reasons why now is a good time to invest in the property market in the UK, in particular the London property market. London is as popular as ever for investors as it is still a hotspot for rentals in particular in the UK, with people from all over the country and the rest of the world not put off at the idea of living and working in the capital. Here are some of the top reasons why investing in the London property market is still a good idea.
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Investment in London
There have been various outstanding investment schemes put in place throughout the capital, particularly in terms of transport schemes such as Crossrail, which is set to dramatically improve the city’s connectivity and help to increase property prices further both in the City and other areas of the capital. Liverpool Street Station and the surrounding areas in particular are set to greatly benefit with new station entrances and new ticket offices set to open in Moorgate.
1 – Positive House Price Predictions for Investment in London Property
A five-year house price forecast by Savills in 2020 predicted house prices in the UK to grow 15% on average by 2024. However, while at the time London was below the average at 5%, there is still positive growth to be had, and the London property market has been picking up quickly since the end of lockdown and since COVID19 restrictions were relaxed, allowing more people to travel into London to live and work and getting employees back into London offices rather than working from home. In the last decade, property prices in London have risen at a rate faster than any other UK region, and the COVID-19 pandemic is not expected to have a prolonged impact on this. In fact, it may be seen as a good reason to invest in London property right now while prices are lower than average, as they will likely rise in the future.
2 – Luxury Properties for Property Investors London
The City of London offers many opportunities for investors to purchase luxury properties and increase their return on investment. More and more luxury property developments are set to take place in the capital, along with existing luxury properties including period homes, listed buildings, and elegant, bespoke apartments such as St Mary at Hill by Galliard Homes.
3 – Employment Growth Benefits Investment in London
Despite the boom in remote working that led to many people living and working in London moving out of the city to larger properties in different areas, the major London offices are back in action, and employment in the city is higher than ever. As a result of this, the demand for properties in London is on the rise once again. The City of London provides employment for approximately four hundred thousand employees and is the home of the headquarters of several large companies including some of the biggest banks in the UK such as Standard Chartered and Lloyds Banking Group.
4 – Demand for Rental Property
As London is one of the most in-demand cities for young professionals to live and work, the demand for rental property is very high, making it a low-risk choice for buy to let investors. With the rise of house prices in London and throughout the UK, many young professionals are looking to rent as they struggle to get onto the property ladder themselves, leaving many opportunities for investors in the London rental market. London has a wide variety of suitable rental investment properties to choose from including apartments and larger properties that are ideal for use as an HMO.
5 – Excellent Investment Reputation
The UK, but London in particular, has a good worldwide reputation as a safe haven for property investment. Both domestic and foreign investors have always found real estate investment in the City of London and the rest of the capital very appealing. The city is very stable economically and financially.
What are the London Property Market Predictions for 2022?
While the London property market has been behind the rest of the UK in terms of growth in recent months, this has not stopped it from being a popular property investment choice for many investors. After around a decade of rising house prices, COVID-19 caused the capital to experience a huge slowdown. While the property prices in London still remain some of the highest in the country, the growth pace has slowed and even fallen in some parts of the city.
Over the next year, most experts predict that the property market in London will continue with slower rates of growth compared to elsewhere. However, the housing market in the entire UK is also expected to slow down after 2021’s frenzy with the effects of the demand growth due to COVID-19 and the stamp duty holiday beginning to wear off.
Savills housing forecast for 2022 predicts that the property market activity is going to vary across the capital. The firm expects prime central London, where the top-end properties go for the highest prices, to see a strong house price rise of around 8% over the next year. On the other hand, prime outer London is expected to see an increase of just 4% over the next twelve months – but this is still a significant increase for many of these homes, with values already in the million or multi-million pound regions.
Savills predict that the mainstream London property market will see just 2% house price rises over the coming year, which is lower than the current UK average of 3.5%.
Will the Property Market in London Build Momentum?
Despite high house prices, lower rental yields, and other downsides of London for property investors, the UK capital is set to remain a very popular investment hotspot. London is a major international city with a strong focus on investment projects and constant regeneration, ensuring that it remains economically important. Along with this, the top transport system expansion including Crossrail will broaden the areas that property investments can target. Rental prices in London are also higher compared to the rest of the UK, so some investors find that this will outweigh the initial cost. According to Zoopla, the average rent in London in October 2021 was just over £3400 monthly. Although there are some signs of the property market cooling down in other areas of the UK, estate agents are noting that London is continuing to build momentum.
Where to Invest in London
The economic issues caused by Brexit and the COVID-19 pandemic may have led to an atmosphere of uncertainty when it comes to investing in London property. Despite this, however, there have been encouraging signs of increases in both house prices and rental yields in London. Some of the top areas to invest in London right now include:
Barking and Dagenham
In the east of London, average yields in this area increased to 5.4% in 2020 and house prices also rose by 3%. The average house price was £315,000. This area is already one of the cheapest places in London to buy, and home to some of the largest new property developments in the capital.
Sutton
In south-west London, Sutton is also an attractive option with yields rising by an average of 4.4% and house prices also up by around 3%. The average house here is worth £449,000, and there are investments worth more than £400m in the area. The location here makes it a high demand spot as it’s only half an hour from central London by train, but very close to the Surrey countryside.
Merton
This south London suburb has great transport links into the centre, plenty of green space, and attractive older properties. It is a leading location in London for price rises with an average price of £820,000, which is more than thirty percent higher than the London average.
Redbridge
In the east of London, Redbridge is another area with a lot of investment potential. Right now, the properties here are affordable; however, Rightmove predicts that house prices here could rise by as much as 17% by 2024 due to the imminent Crossrail completion. It was one of the few London areas to see a rental price increase during 2020, and the average property price here is just over £450,000.
While the property market in London may not be growing as fast as some other areas in the UK, there are plenty of reasons why investing in the capital is still a wise option.
