The tendencies of the new century
“An Englishman's home is his castle” one of the most famous proverbs when it comes to British and their understanding of life but since we’re living in the 21st century, things are rapidly changing. First owning a property has become a form of investment and nowadays the tendencies are all about rent to retirement and life in the post-ownership era but there’s still one question left on the table for those looking for a good investment - does owning a property in London remain a good investment or renting seems to be the better option.
Brexit and all the obstacles around it keep on casting a shade on the real estate market in the UK. Fears of a crashin the household prices keep on growing and owning a property in London seems to lead to a dead end. That’s the price we pay for living in interesting times and relying on the unsteady and uncertain economy but let’s stick to facts and figures and see where this will lead us to.
Up, down or immovable, the real estate prices don’t seem to stick to a certain tendency, so long story short these are disorienting times for those who consider buying a home in Great Britain. The situation on the housing market somehow resembles walking on thin ice and that’s one of the reasons why the number of renters in London is constantly growing.
Buy-to-let investors are literally up against a brick wall, since new taxes and regulations constantly arise. On top of it, interest rates keep on rising, while the mortgage affordability rules remain strictly tight. To put a roof over your family’s head was considered to be essential only a decade ago but the reality now couldn’t be further from this statement. The number of housing transactions has been stuck at the same level for nearly five years but the housing market in London is down by 20 per cent over this course.
Is owning property in London still a good investment?
Mr Mead who is a veteran in the housing industry with over 40 years of working experiences has got something to share, so we’re about to let his experience talk. In his opinion, now is the best time there’s ever been to buy a property in London. Actually, this statement doesn’t suffer from a lack of solid support. The opinion is shared by numerous letting agents across the Kingdom.
Henry Pryor is a buying agent who pointed out this simple fact: “Uncertainty is bringing with it an opportunity, because people don’t know how their sale is going to go, or how far their budget will stretch. As a result, people are selling for less than what they might be able to get.” And this means that your time to strike has come.
Buy-to-let scheme - is there any profit left in it?
Over the past 20 years or so, the popularity of buy-to-let as a way to get additional exposure to the property market, has grown substantially – the fingerprints of the breakneck rise in house prices are all around the place and can easily be blamed for hammering this trend. But up to date, the experts agree that the outlook in this niche is not exactly rosy.
The numerous series of tax and regulatory changes have already hit the landlords’ profits and significantly raised the costs of the initial investment. Getting a mortgage in the first place requires passing of a really intense “stress test”, which makes it harder and harder to get on the property ladder. Long story short - “All the benefits of owning a buy-to-let property are being taken away” according to Mr Ed Mead.
Well, let’s not make it sound catastrophic and see the light at the end of the tunnel coming in the shape of a stable pension-style income, that assures you a monthly payment, because of the owned property. Although yields are low, there are more and more people willing to rent in the capital, which means that you can easily ask for higher rent, so nothing’s lost yet. Just be patient and if you had invested in the right market, augmenting your earnings is guaranteed in the long run.
Be careful though and choose wisely, since good and bad property deals can be located in the same neighbourhood and even on the same street.
What does the Brexit discount mean for the real estate market?
The mechanics of Britain’s departure from the EU are yet unknown and the thousands of memes across the web have come along with a lot of controversy as well. It’s logical that this uncertainty has affected the real estate market and its movement as well.
After all, will a good Brexit deal cause a rise in prices, will it crash them down or will there even be a deal at all – unfortunately, all we can do is to guess, so it’s normal to observe a significant stagnation in housing.
“Wait and you’ll see …” seems to be the right approach for numerous people across the country and honestly we can’t blame them for laying low until the situation becomes somehow clearer.
5% was the expected drop in property prices in the second quarter of 2019. Still, the buyers don’t seem quite ready to gamble with such an unstable investment at least for now. The same goes for the international buyers and their stepping down activity – e.g. for the last year, 80% of London transactions have been made by UK domestic buyers.
Neal Hudson, director of market research company Residential Analysts, said a hard Brexit will likely result in further stagnation and even bigger price drop – a lot more than 5%. He is not optimistic about sharply falling prices in London to have a silver lining any time soon.
In his exact words: “If we had something more severe — a hard Brexit — there would be rising mortgage interest rates and stressed affordability. Prices might come down more, but if you’re a first-time buyer trying to get into the market, the lenders are probably just going to shut up shop.”
I’m ready to buy but where?
When you put a bottom line with the current mortgage interest rates at about 2%, it is cheaper for London renters to buy the property they live in than to keep paying for renting it. We admire your decision, especially if you’ve managed to pass the uneasy test required by lenders.
If you’re not familiar with the terms, then the first thing you should know as a borrower is that you must show that you can afford much higher rates of interest. And that is the catch, which basically has a really binding effect for the first-time buyers, especially the ones looking for a property in London.
To make things clearer, let us give you an example - if you have a stress rate of 7% you should prove you’ve got additional £1,000 of disposable income to pay towards your mortgage, so you can afford that property.
If all this is already behind your back, let’s get you back on the topic and the initial question:
Where is best to buy a property in London?
In recent years central areas of the capital have become unaffordable to the mortal ones. JLL forecasts that the house prices in prime central London will rise by an average of 12.5% over the course of the next five years. However, the average house price in the UK is predicted to grow with only 2.5% for the same period of time (2018-2022). The research suggested that the prices in London’s biggest regeneration areas will outperform the average city value by 40% in just five years.
London’s population has been growing by 100,000 a year for the past two decades and that trend is expected to continue for the next two decades. This explains why there’s a serious shortage of homes in the capital and why people are literally fighting for a breath of fresh air. That’s why the boundaries of prime London are becoming more and more elastic, which means that you have more options to invest in the right borough.
Best options on the real estate market in EAST LONDON
Almost 11,000 homes are being built in Barking as we speak and over the next decade up to 30,000 citizens will move in the borough.
Hundreds of millions of pounds are pouring in Bromley-by-Bow, aiming to transform this old industrial site into a residential area. In the course of the 10-year plan, more than 8,000 waterfront homes will be built along the banks of the River Lea. Have in mind that living by the Thames is hugely popular among the millennials, so owning a property there seems to be a rather appealing deal.
Since Poplar’s building pipeline includes 3,000 flats, along with shops, offices and new parks, it’s worth to be put on your consideration list.
Blackhorse Road deserves a closer look as well. The idea, according to the Blackhorse Lane Action Plan, is about 2,500 new homes to be built north of the Blackhorse Road station, which is supposed to attract a new generation of designers, artists and start-up entrepreneurs.
Over the next five years, hundreds of millions of pounds are set to be poured into East Home. New homes, cafés, shops, and restaurants are all part of the planned borough’s transformation.
Moving to SOUTH-EAST LONDON
Walworth is rapidly changing – no wonder since multi-billion-pound regeneration projects are going on all around the borough, so it’s wise to keep an eye on this place.
Charlton is another location, which will benefit from the regeneration with up to billions of pounds of investment in the River Thames area. 5,000 new homes, new shops and restaurants, schools and kindergartens - All of that is set to happen on a 275-acre swathe of industrial land, overlooking the Thames Barrier, in the course of the next 25 years, so if you’re not afraid of a long-time investment, Charlton is the one to aim for.
A sneak peek of SOUTH LONDON
Massive house growth and drastic improvement of the local transport links (how does a £3.6 billion project sound) those are the two main reasons to pin Lewisham on the map with hypothetical London boroughs to own a property within.
Another massive project is taking place in the south of London. A £435 million plan is set to reinvent two local housing estates in Mitcham, promising a bright future for the prominent buyers.
Heading to the WEST LONDON
The industrial corner beside the Thames known as Brentford is about to get a seriously transformative, multibillion-pound makeover. Thousands of new waterfront homes, restaurants, shops, cultural and sporting facilities are among the assets bound to transform this formerly jump-off place.
A makeover which will cost “the modest” £600 million will transmute the area of South Kilburn, located between the green Queen’s Park and the Victorian Maida Vale, by granting it with inspiring designs from top architects. Over the next 10 to 15 years, the estate will be replaced by 2,400 new households, waiting to be called someone’s home.
Did you know that a fairytale green bridge spanning the heaving lanes of the North Circular Road is planned to adorn Brent Cross? This landscaped walkway will link this new north London suburb — with thousands of new homes offering fast Thameslink trains to the City as well. A reboot of Brent Cross Shopping Centre is a part of the planned enrichment too.
And last but not least let’s pass by NORTH LONDON
Welcome to the district of Hornsey, this not so well-known place is situated between Crouch End and Alexandra Palace, which is quite an acceptable location if you ask us. The fast commuter links and relative affordability are the solid reason behind the billions of pounds of investment in thousands of new homes for young professionals and cash-constrained first-time buyers, thinking about owning a property in London.
In the long run, a residential property still looks solid
Residential properties are a cyclical market - like anything else, it has ups and downs in the short-term, which (to be honest) can sometimes look quite long. The uncertainty around Brexit has prompted many buyers and sellers to sit on their hands, choosing the wait and see approach. Still, this tendency is rather unlikely to last forever.
After all, according to a research from Knight Frank, the UK had reclaimed its position as Europe's leading commercial property investment market in the former year of 2018.
At the end of the day, remember that no matter if you’re leasing, owning, living on rent or buying a home, the one thing you’ll always need is a proper, professional cleaning and that’s the moment we’re getting into the picture. We are ready to answer even the highest expectations and transform your property in more than just a place to get back from work but a brightly clean home instead.