House prices and sales across Greater London — stifled for the past three years — are set to enjoy a “Brexit bounce-back” as soon as Britain leaves the European Union at the end of March, experts are predicting.
Following a long period in which sluggish wage growth, stretched family budgets and political uncertainty have battered buyer confidence, there appears at last to be some good news.
The average price of a new-build home in Zones 1 and 2 is expected to jump 17.6 per cent between Brexit and 2023, according to housing market forecaster JLL in figures published today.
The consultant group anticipates a 15.3 per cent rise in prices at the luxury end of the market in central London and 14.3 per cent across the wider Greater London area over five years, triggered by Britain finally leaving the EU next year.
“Once we have confirmation of a deal and a reasonable transition period, people will start to feel more confident and this will encourage home owners and investors to buy again,” says Adam Challis, head of residential research at JLL. Challis expects values to nudge up next year before accelerating faster with a greater sense of job security.
“As earnings improve, renters and wannabe first-time-buyers may slowly find that life feels a little easier,” he explains.
WHY IS THE OUTLOOK SO POSITIVE?
Positive economic indicators underpin the optimistic housing outlook: GDP is forecast to grow by 1.5 per cent next year, followed by two per cent in 2020 and peaking at 2.2 per cent in 2021. Earnings are also expected to rise by as much as four per cent for three consecutive years in 2021, 2022 and 2023, in line with house price growth in Greater London.
House price growth is also being driven by the escalating supply crisis within the capital. Housing starts will remain around 20,000 units a year over the next three years, and begin to rise towards 25,000 a year by 2023, the study predicts. This falls a long way short of the Mayor of London’s target of 66,000 new homes per year.
WHERE SHOULD BUYERS LOOK IN AN ERA OF SLOW AND STEADY GROWTH?
London buyers are accustomed to house prices rising rapidly, by as much as 20 per cent a year in 2014. So in this new era of slow and steady growth, which pockets of the capital will perform the best — and where should prudent buyers look?
New findings from specialist property research consultancy Dataloft and developer Mount Anvil, exclusive to Homes & Property, show that new flats in regenerating areas are the best buy for the long term.
Sales prices of apartments in large regeneration projects have risen by an average of 17 per cent per year between 2012 and 2016, in stark contrast to non-regeneration schemes in inner London, the report reads. It says the boroughs of Newham and Tower Hamlets are leading the charge.
“A promising return on investment has, and always will, take precedence for landlords, but we have observed a fundamental shift in the mindset of owner-occupiers in the past 18 months. While location, design and asking prices remain key determinants, capital growth potential has emerged as critical for owner-occupiers, particularly in light of stamp duty costs,” says Jon Hall, sales director at Mount Anvil.
Buyers with deeper pockets are looking to residential areas such as Aldgate where more new-build homes are on offer. The Berkeley Homes scheme, Goodman’s Fields, is at the centre of the £23 million regeneration of Aldgate which includes the overhaul of Aldgate Square, new cycle paths, the planting of 71 new trees around two new public spaces and new water features.
Goodman’s Fields when completed will deliver 1,050 homes, a 250-room hotel, gyms, pubs, restaurants and Escape Rooms — Crystal Maze-style games rooms. A studio costs £762,500. Call 020 3432 6629.
Regeneration is not confined to east London. A decade ago the most common reason to visit Victoria was to get on a train or bus. But the transformation of Victoria Street and Cardinal Place is spreading to the rest of the area. This year, former nightclub Pacha opens as a 15,000sq ft food market and a £700 million upgrade of the station opposite is under way. CBRE research forecasts that living close to new amenities in Victoria could catapult house prices by as much as 50 per cent by the time the regeneration is complete.
Edwardian Westminster Fire Station in Greycoat Place is being converted into 17 flats with a private courtyard and a restaurant. Prices will start from £850,000. Call CBRE (020 7182 2477).
HOTSPOT: CANARY WHARF
Self-employed Geoff and Stephanie Rampton bought a three-bedroom loft flat in the One Park Drive residential skyscraper in Canary Wharf. From their home in Wapping, the couple had watched Canary Wharf developing and transforming over the past five years.
With the rapidly expanding plans for the estate, and more weekend activities on offer, they felt the area would make an ideal setting for a lifestyle change and a good investment.
‘We made use of Help to Buy’
David Bolger and his partner Lydia Hubbard, both 27, rented for three years before buying a new flat at Trinity Walk, part of the £400 million regeneration of Woolwich centered around the arrival of Crossrail.
David, a civil engineer at London City airport, says: “We lived in a one-bedroom Victorian conversion flat in Bexley and were fed up with paying the landlord and the maintenance that goes with living in an old property.”
They moved to be closer to the shops and amenities of Woolwich, which are improving. Their two-bedroom, two-bathroom ground-floor flat cost £495,000. Using London Help to Buy they paid a five per cent deposit of £24,750, funded with savings and a little help from their family.
Under the scheme they received a 40 per cent government equity loan for £198,000, which is interest free for the first five years, and they took out a mortgage for the remaining balance of £272,250.
Their monthly outgoings are around £1,000 for the mortgage and £250 for service charges.
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