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Central London property prices set to rise 18% in next five years

Central London property prices set to rise 18% in next five years and rents by 19.5% as market moves forward after the UK’s general election, it is claimed.

The latest analysis says that unprecedented uncertainty surrounding last month’s election saw a stifling of house price growth across London, with the rate of house price growth at less than 4%, compared to the 9.6% increase seen in 2014.

The majority win by the conservatives has eased the fear of mansion taxes and potential capped rents. London is not to bear the brunt of these negative tax changes. However both issues have now subsided, following the surprise majority win by the Conservatives, according to international real estate consultants Cluttons.

Pre election worries saw domestic and international buyers’ confidence reflected in a sharp tailing off in demand during the first quarter of 2015. Behavioral trends saw vendors withdrawing properties and buyers adopting a wait and see approach. However, this is not the case with the exit strategy of our London Property Bond which has sold 3 off plan luxury penthouse apartments in fashionable St Johns Wood. As such it provides an excellent example of a strong niche market breaking the barriers in central London property.

‘There is no doubt that the results of the general election have helped to re-inject confidence into the market that had receded early on this year,’ said Cluttons’ international research and business development manager, Faisal Durrani.

‘The outlook for the London housing market has stabilised, while buyers and vendors have returned to the market following a conspicuous absence of activity. Our outlook for the rest of the year is for increased stability in the market and a return to a more normal state of activity,’ he added.

The report also says that despite the Mortgage Market Review (MMR) contributing to a 16% year on year dip in home purchase loans in greater London to March 2015, affordability appears to be improving slightly, with the average loan size dipping to 3.86 times annual income in the first quarter of 2015.

Cluttons forecasts modest central London house price growth in 2015 of between 2% and 3%, before accelerating to nearly 5% in 2016 and stabilising at around 4% per annum between 2017 and 2019. Cluttons expect this level of growth to deliver cumulative capital value appreciation of almost 18% over the next five years.

The prospects for the prime central London rental market are stable, with average growth of 4% per annum forecast for the next five years. ‘The key driver of course for this behaviour is the desire to purchase.

For investors seeking a strong market to invest into, our London Property Bond represents a sensible option with strong forecasts for the years ahead. A 5 year bond with a fixed return of 8% per annum paid every 6 months.

 

Property Hotspot

Want to know the best Property Hotspots?

As investors we are always on the look out for the next property hotspot. But would you have guessed on Bristol being the number one UK property hotspot? In fact, the number of homes sold in the Bristol postcode surrounding Avonmouth nearly doubled in 2014 from the previous year. Are Britain’s latest property hotspots developing into regional house-price bubbles? Well it is looking that way. Avonmouth, next to the Royal Edward Docks (a vibrant area that has benefited from extensive regeneration) was the district with the biggest increase in transactions last year, as sales jumped 94.5pc in 2014, according to new analysis from property agents Hamptons International.

The number of sales rocketed 128 to 249 over the year and house prices grew 21.1pc, double the rate of the national average. In the Hamptons 2014 index of British postcodes by transaction volumes, neighbouring Redcliffe in Bristol city centre came second with sales up 93.2pc last year. It’s all about Bristol!

There has been a huge growing demand to live in and around Bristol. So what are the reasons for this desire to live in Bristol? Maybe because it’s one of the UK’s leading tech scenes. Possibly the relatively large number of new-build developments and high use of the Government’s Help to Buy scheme. For investors, Bristol could be the place for capital growth.

Other UK property hotspots measured by the rise in the number of property sales, included Langdon Hills in Basildon, Essex, which came third in the ranking. Parts of Leicestershire, Cambridgeshire and North Dorset also recorded huge increases in transaction levels. Cardiff also featured in the top ten UK property hotspots, which only studied postcode districts in which there were more than 100 sales in 2013.

Focusing on areas in and around London, Greenwich, Croydon and Dartford all reported an increase in sales too, landing in the top 20 areas by increase in home sales in 2014.

With the extortionate high prices of central London property, these boroughs on the outskirts of London have benefited from those moving out from the centre. High prices for zones one to three for London transport could also be a major factor for first-time buyers buying in Croydon rather than Clapham.