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Real Estate Knowledge

It’s 2021: Where Can You Invest in the London Property Market?

  • The mortgage approval rate is up 827% since last year.
  • Stamp duty has been waived – saving buyers up to £ 15,000
  • Retail investment is up £290m in 1 month

The UK offers relative stability and transparency, with London at the core of it’s market as one of the major metro areas of the world.

A hub for overseas property investment, the demand foreign buyers have been responsible for as much as a 20% increase in prices. The city is home to millions of immigrants and is often the primary choice of investors due to its geographically convenient location and growing scope of opportunities.

Stamp duty has been waived for the bulk of 2021, releasing the pent up demand from Covid.

A quick history…

Pre-pandemic, Prime Central London (PCL) prices suffered due to “higher rates of stamp duty and political uncertainty,” cites a 2019 Knight Frank report, pushing the average price for existing homes below their 5-year average.

Property in popular neighbourhoods fell up to £200/sq foot below average: Hyde Park, St John’s Wood, Chelsea, South Kensington, Kensington, Belgravia, Knightsbridge and Mayfair in PCL ranged between £1,000 to less than £2,000/sq foot.

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Covid-19 made an immediate, obvious impact throughout 2020, with an initial crash followed by volatility, spurred by quarantine and mass uncertainty. However, in March of this year – 2021 – property transactions were the highest in a decade in Prime Central London. In other words, the property market was at its most active in the last 5 years.

Price growth began at the beginning of 2021, and demand will continue to grow as travel eases, vaccines take effect, and investors realize the opportunity to break in before supply is snatched up at a premium.

This image has an empty alt attribute; its file name is London-house-prices-map-1-1024x612.png
London remains a strong investment location for capital appreciation assets. 

The demand for properties in the city still grows, and investors are encouraged to view it broken down in the 5 main areas mentioned below:

  • Central London
    • West End, Covent Garden, South Bank, London Bridge, Chinatown, City of London;
  • North London
    • Barnet, Enfield, and Haringey;
  • South London
    • Bromley, Croydon, Kingston upon Thames, Merton, Sutton, and Wandsworth;
  • East London
    • Collondale, Saxilby, Brookville;
  • West London
    • Popular neighbourhoods: South Kensington, Notting Hill, Fulham, Hammersmith, Shepherd’s Bush, Kew, Twickenham;

As far as investment goes, reallymoving.com suggests the following areas in terms of pricing, transportation, environment and other factors that are to be considered pre-purchase:

  1. Barking and Dagenham
  2. Havering
  3. Leyton
  4. Battersea
  5. Bloomsbury

They also have this article on organizing a home move to London.

A large construction project in Battersea, London.

Wile London is on track to recover from its a recent turbulent timeline, smaller metro areas and submarkets are increasingly being viewed by investors for their higher yields, watch our quick video on that here.

For more information on London, there are easily accessible market reports from the London Datastore – a public database – here.

This just the beginning of the conversation

At Denzity, we publish personal finance and investment articles for the young professional. If you have any questions and comments, write them below or reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.

Categories
Real Estate Knowledge

TOP 4 SOLID REASONS To Buy UK Property

Before purchasing any overseas property, investors must consider the advantages of the UK market. The country boasts the 4th best property market in the world, and is a strong buy.

1. Variety of Options

London Metro Area. The Northwest. East Midlands. Scotland. The UK boasts a wide variety of property that is often overshadowed by exorbitant prices in posh residential neighborhoods.

In fact, the laws of supply and demand give investors options from houses in Durham for under £ 60,000 pounds to an extravagant £ 13 million pound home in Belgravia. In other words, you can break into the market with under $100,000 USD.

This variation among asset classes means different ROIs based on your risk profile and long-term goal. For example, Even in the famously expensive London market, there is a wide variety of prices.

Multi-million pound homes in Knightsbridge and Westminster draw attention away from the surprising affordability of other London districts.

2. Extensive Transport Infrastructure

With over 70 airports, 40 major ports, excellent rail links, and toll-free motorways, the UK offers residents strong transport links. The connection between suburban and rural areas rank high among EU members and are only strengthening. On top of domestic railway lines, Eurostar also links the UK to the rest of Europe.

In May 2021, the Transport Minister has revealed plans to inject £401 million pounds into transport infrastructure. New stations will be built along the northern Transpennine route, especially between Leeds, Manchester, and York, along with upgrades between York and Church Fenton.

Record levels of transport investment will promote new property markets.

The respective locations’ real estate prices will mushroom as the investments in infrastructure are realized over the next few years, and have already seen surges in market energy.

3. Post-Covid Bounceback

Despite a new stamp duty for non-residents, property firm Strutt and Parker is predicting higher transaction volumes than last year. In fact, they have released a five-year forecast which estimates up to 35% growth.

On top of that, Prime Central London’s lettings have seen a YoY decline of -6.7%, compared to a worst-case prediction of -10%. While market indicators do not match pre-Covid peaks, they indicate a slow return that still offers an opportunity for investors to break in.

London is among one of many markets that is expected to bounce back.

The sector can see continued government support through planning system reforms and increasing demand for new-builds between homebuyers and investors.

4. Strong International Community

The UK and its popular metro areas have consistently attracted foreigners. So much so, that King’s College research shows foreign investment is responsible for prices being 3 times higher than they otherwise would be.

The country is home to millions of immigrants and is often the primary choice of investors due to its high level of internationality. In fact, only 20% of investment volume is purchased by UK citizens. In the same 2021 JLL market report, the research breaks down the purchaser nationality into the following percentages:

  1. USA: 36%
  2. UK 20%
  3. Hong Kong: 12%
  4. Czech Republic: 10%
  5. Germany: 10%
  6. China: 4%
  7. Other: 7%

The markets of the “new normal” are on a shaky recovery, though still offer plenty of options for professionals to invest their hard-earned cash. Going forward, policy changes in EU relations or stamp duty is sure to impact property prices, and our future publications will keep you up to date on property trends to be aware of in the UK.

Now that you’re here…

At Denzity, we help international investors find their next property. If you have any questions about your next purchase, reach out to our team, here. Stay tuned for more location-based articles, investor focused content, and listings from our clients.