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Top 5 Reasons to Invest in London Property in 2022

Until the pandemic hit the UK and caused a recession, the London property market had been on a flat growth trajectory for a few years. As the world and the UK fully emerge from lockdowns and pandemic related restrictions, should you still invest in London property? 

Unlike previous recessions, which saw property prices crash, the UK property market had displayed positive response, in fact, reporting a boom in activity post-lockdown. What made this recent recession different were the measures put in place to help restart the housing market, in addition to supporting affected businesses and individuals. 

Read to find out if investing in the London property market is still a good idea in 2022:
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Case Study: Why Investing In Poplar, East London Makes Sense

A LOT has been happening in East London. Previously eclipsed by the glamour of the West End, the East End has become the centre for the hip, happening, creative and innovative. East London is home to up-and-coming areas like Poplar and Aberfeldy Village. 

More are choosing to reside in the East because of its relative affordability compared to the West, the gentrification that’s sweeping through and the creation of more jobs through developmental initiatives like Canary Wharf, East Bank, Stratford and the Asian Business Park. Some of the world’s largest tech companies like Google’s Innovation Hub and Amazon have also made their home in the East. 

This short case study covers the following:

  • Poplar: population density & house price growth
  • London property price & rental growth
  • Vacancy Rate

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2021 London Property Outlook – A Mid-Year View

Following our mid-2021 UK Property Outlook, here is our mid 2021 London Property Outlook.

A key contributor of the UK economy, London has held the pole position of #1 City in the World’s Best Cities 2021 rankings for 5 consecutive years based on a number of criteria including human capital, infrastructure and culture, experience and prosperity. It has also held on to its title as the overall European City of the Future in the Financial Times’ fDI rankings for 2020/21. London is the best city in the world for property investment, second only to Los Angeles in the Global Cities 30 Index rankings

How will London negotiate the challenges of COVID-19 and the uncharted terrain of a post-Brexit world? Will the UK’s main city, continue to be known as the “capital of capitals”?

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5 Things You Need to Know About the London Property Market Now

Here are 5 things that property investors need to know about the London property market now. 

UPDATED JAN 2020

Boris Johnson is now the Prime Minister and he sure has gotten his way to get Brexit done. Talks are going back and forth between the UK and EU, but back in London, it’s pretty much business as usual. Investors are getting off that fence that they were sitting on over the past two years. Looking into London property? Read on.

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Manchester Tops House Price Growth in UK

Manchester recorded a 7.0% increase in house price growth compared to London’s dismal 0.4%.

Manchester is England’s top performing city for house price growth, the latest data from Hometrack shows, while London remains on a flatline.

The data comes from the property research firm’s UK Cities House Price index, which tracks housing data across 20 UK cities and regionally.

For house price growth over the last 12 months, Manchester obtained top spot at a cool 7.0% increase followed by Birmingham at 6.5% and Liverpool at 5.9%.

Price growth in London showed no signs of recovery, staying at a stagnant 0.4%.

Across the UK as a whole, prices have gone up by 4.3% over the last 12 months.

Price Growth of UK Cities in last 12 months
Price Growth of UK Cities in last 12 months: Leading cities in the UK that outshine London.

Many cities in the Northwest have posted high capital gains over the average for the last 12 months. Yet, there is still much room for growth, as prices remain low, well under the national average.

The average price in Manchester was at £163,200, Birmingham is at a slightly lower £159,800, and Liverpool, at £118,800.

Comparatively, the average price of a home in Britain is £217,400.

Although price growth in London is stagnant, housing in the capital costs more than double the national average, at a whopping £491,200!

Average Prices in UK Cities
Average Prices in UK Cities: London prices are at stratospheric levels, making high yields and capital gains quite impossible.

Richard Donnell, Insight Director at Hometrack says that the London market is going through a period of price alignment, having posted some very large gains over the past 8 years.

“Over the last 12 months, average prices in London have grown by just under 1%. This is much lower than the annual average growth of 9% over the last 5 years. These averages mask a wide range of house price growth at a sub market level. Actually, house prices are falling across a third of London’s local authority areas.”

Homes in the capital have become unaffordable for many people after years of surging prices, while wage growth remains meagre and lenders apply tougher mortgage criteria.

However, the price gap between regional cities and the capital is narrowing.

Hometrack expects the gap in prices between London and other UK cities to close further over the next two years. This follows a similar pattern from 2002 to 2005 when London house price growth was relatively weak compared with the rest of the country, after a period of surging prices from 1996 to 2000.

Richard says, “We expect house prices to keep rising across regional cities such as Birmingham, Manchester and Edinburgh over the next two to three years. During this time house price growth in London will remain flat, with annual price rises of approximately 0-2%. As a result, the gap between house prices in cities outside of the south-east and house prices in London will continue to contract.”

Price falls in London will reduce the gap between it and regional cities
Price falls in London will reduce the gap between it and regional cities

Manchester and Birmingham are expected to be the first cities to move closer to London prices, with demand for housing likely to be boosted by strong job growth. They are forecast to return towards average prices being around half of those in the capital compared to a third today.

“The level of house price inflation seen in large regional cities during the last peak, between 2000 and 2003, gives a good indication of how much prices may rise this time around. If history is to repeat itself and these cities are to get back to where they were, then prices could increase by as much as 20-25%,” Richard adds.

This weekend, find out more about this amazing project in Manchester and how you can profit from it.
This weekend, find out more about this amazing project in Manchester and how you can profit from it.

This weekend, learn how you can invest £75K & GET BACK £190K in 5 YEARS with the POWER OF LEVERAGE! Come for the EXCLUSIVE WORLD LAUNCH of an iconic new residential development in the Manchester city centre – THE CROWN On Manchester’s Skyline. Call +60162288691 to book your seats now!

By Ian Choong

Sources:

  • https://www.theguardian.com/money/2018/jun/29/london-house-price-growth-at-nine-year-low-amid-edinburgh-and-manchester-spurt
  • https://www.hometrack.com/uk/insight/uk-cities-house-price-index/may-2018-cities-index/