London house prices:Croydon tops the list of first-time buyer hotspots with biggest price growth for starter homes

Croydon's starter homes have risen in price by almost 20 per cent over the past year, thanks to regeneration and increased demand, but it's still one of the most affordable areas of London.

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Starter homes in Croydon are about £185,000 cheaper than the capital's average, so it's no wonder first-time buyers are flocking to this south London district.

Yet new figures from Rightmove show that this surge in demand has seen prices rocket by almost 20 per cent this year - the highest rise recorded in the UK - taking the average cost of buying a home with two bedrooms or less to £300,000.

Over the past few years, Croydon has undergone huge regeneration. Just last year it was named as the area with the fastest-growing tech cluster in London, thanks to rents being about a third cheaper per square foot than in central London.

Thousands of new residential developments are also in the pipeline. Five thousand new homes are set to be built this year, 6,300 next year, and 8,200 in 2018. Some of these are part of the Help to Buy scheme, where Government loans of up to 40 per cent of the property value are available to first-time buyers, meaning only five-per cent deposits are needed to get onto the property ladder.

"There has been an influx of first-time buyers coming to the area, especially over the last six months," says Matthew Keddo, residental sales manager at Barnard Marcus. "The tramlink which goes directly into East Croydon station, where trains take you into London in 18 minutes, is a huge attraction and people are buying into the new Westfield shopping centre which is due to open in 2022."

New cafes and restaurants are opening up to cater for the City workers who are moving to the area from Tooting, Streatham and Brixton, but Keddo says there's still a fair way to go in terms of regeneration.

"Londoners priced out of most other parts of the capital have sensed a combination of convenience and value, aided by some serious regeneration," says Rightmove director and housing market analyst Miles Shipside.

Dartford in Kent, Ilford in north-east London and Luton in Bedfordshire have all seen similar price growth of more than 18 per cent for the first-time buyer market.

Shipside says: "With five per cent less property coming to market in Dartford in the last four weeks, compared to the same period in 2015, limited fresh supply is also a big factor."

"Luton has been a low-priced town for some time with easy London access, and has now come into play."


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