New year property predictions: London's new homes hotspots to watch in 2015

Zone 3 will become the new hot area and tech districts will take off, as Crossrail breathes fresh life into the capital and beyond, and the rental market sees major growth.
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3,000 new homes: Wood Wharf, picked out in light green, includes retail and commercial space on the Isle of Dogs

Zone 3 will become the new Zone 2
Priced out of central districts, buyers will continue to push into cheaper areas beyond the West End and City fringes. Almost 80 per cent of housing demand in London is for homes below £450 a square foot, which roughly equates to a price ceiling of £250,000 for a typical one-bedroom property and £350,000 for a two-bedroom home.

Developers are scrambling for sites in Zone 3, believing this is where demand will be strongest. Properties in so-called “non-prime” districts will see the biggest price gains — 22.7 per cent over the next four years, according to estate agents Savills.

Most buyers will head further south and east, where the bulk of new homes are being built and values are roughly two thirds of those in north and west London.

Areas likely to fall into the spotlight include Ladywell, Hither Green, Streatham, Catford, Colliers Wood and Crystal Palace in the south; Canning Town, Leytonstone, Forest Gate, Royal Docks, Manor Park and Walthamstow in the east; Cricklewood, Harlesden, Hornsey, Tottenham and Park Royal in the north, and White City, Acton, Gunnersbury, Brentford and Ealing in the west.

IMAGE GALLERY: WHAT'S IN STORE FOR LONDON IN 2015?

 


Rental villages for the facebook generation
Purpose-built “rental villages” for the Facebook generation will spread like wildfire. Half of 20- to 35-year-old Londoners believe renting will become the norm in their lifetime, according to Halifax’s Generation Rent report.

Shut out of home ownership, many young Londoners are desperate for decent-quality, fair-priced accommodation from a landlord they can trust. So developers are switching their focus to “build-to-rent” and taking advantage of a £10 billion government-backed fund.

The number of private renters is expected to soar by 25 per cent during the next five years, while home ownership will fall to 59 per cent by 2019.

Zone 2 addresses close to train and Tube stations are the favoured locations. Thousands of rental homes are in the pipeline in areas including Stratford, Elephant and Castle, Archway, Deptford, Hackney, Stockwell, Wembley and Whitechapel.



About 30 per cent of all households in London rent privately and new-style corporate landlords are setting out to change the image of renting by offering a service akin to a midmarket hotel chain, with set “room rates”, upgraded interior options and a menu of free and paid-for extras.

About a third of the 5,000 homes in a new neighbourhood ringing Wembley Stadium will be for private rental, typically costing £1,500 a month, according to Quintain, the developer.

Rental demand is strongest at this price point, an affordable figure for junior white-collar workers in finance, law, retail, tech and media, as well as public sector employees such as teachers and doctors.

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The Peltons, in Greenwich, is a new apartment scheme by Peabody housing association in Greenwich



Three developers to watch

Canary Wharf Group has already turned 97 acres of derelict Docklands into a buzzing district and is poised to expand the neighbourhood with  20-acre Wood Wharf — 3,000 new homes and more than two million square feet of new commercial and retail space. Phase one is Newfoundland, a 58-storey skyscraper with 566 flats plus shops and a health club.

St William, a new joint venture between Berkeley Group and National Grid, will focus on turning Victorian gas holders into new homes. Battersea, Fulham, Southall, Becton and Hornsey are among the numerous sites that will see 84 acres of industrial land transformed with 7,000 homes, schools and open space.



Peabody, the London housing charity founded in 1862, is for the first time building homes for sale — by the hundred — and is even masterminding a new “garden city” of 7,000 properties at Thamesmead, the troubled south-east London Sixties concrete estate where the future suddenly looks much brighter because of Crossrail.

Developments unveiled include Lock Keepers, a canalside scheme in Bow; More West, moments from Latimer Road Tube station in west London; The Peltons, Greenwich, and Coopers Road in Bermondsey. Visit www.peabodysales.co.uk.

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Enterprise zone: Royal Wharf homes, part of the Royal Docks vision

Help for the ‘squeezed middle’ 
Working hard but getting nowhere, around a quarter of Londoners are said to fall into this group, struggling to save while their incomes barely cover getting to work and the essentials of life. The average price of a home in the capital is £514,000, and even buyers who have a 20 per cent deposit typically need an income of £108,500, more than three times the London average salary of £33,000, according to the National Housing Federation.

Small is beautiful
Resourceful niche developers will come up with ways to deliver more affordable homes. One company, Pocket, has already found a solution by snapping up small sites other developers pass over and building high-density schemes of compact flats that are 20 per cent cheaper than local prices. A restrictive covenant ensures this “discount” is maintained when the flats are sold, so they are always affordable. Pocket plans to build 1,000 homes within the next few years and is currently selling at Marcon Place, Hackney Downs. Prices for one-bedroom homes are capped at £231,000.



Shared ownership will be rolled out to a much wider audience to include career professionals such as junior doctors, lawyers and accountants.

Intermediate housing on the way
New forms of “intermediate housing” will be introduced for those who cannot afford to buy but whose income is too high for them to qualify for housing benefit, making them reliant on private landlords. Origin is one housing association stepping into the breach, offering discounted rental accommodation to people in the public or private sector earning less than £66,000 a year.

Green homes 
Soaring fuel bills are forcing home buyers to think and act green for money-saving reasons, as well as save-the-planet concerns. Typically, new-builds are six times more energy-efficient than older homes and have much lower running costs, with an average saving of £1,400 a year for a four-bedroom house.

Developers are responding by designing green homes that are more satisfying to live in and architecturally stunning, such as those at The Woods in Woburn, where four detached Scandi-style houses surrounded by protected woodland have light-filled open-plan interiors, yet achieve top energy ratings. Prices from £1,525,000. Call Ultrabox on 01582 764343.



Quicker, better
Crossrail and other transport infrastructure improvements will bring certain areas in from the cold. Next year will see the advent of 24-hour Tube trains, boosting outer areas and towns at the end of the line.

London’s population is already at a postwar high and at the current rate of increase, the capital will grow by the equivalent of an extra borough every three years, hitting nine million people by 2019, 10 million by 2030 and 11 million by 2050, according to the Office for National Statistics.

Because of this, the city needs at least 500,000 new homes over the next decade plus a more extensive transport network taking people to and from work. Most population growth is expected to be in outer London, yet jobs are increasingly clustered in the centre, putting more strain on the transport system. Despite recent improvements to the Tube and Overground, London needs another £95 billion of infrastructure.

Crossrail, due to open in 2018, is already causing big property ripples. The east-west route across the capital will bring an extra 1.5 million people to within 45 minutes of central London, and morph Woolwich and Abbey Wood, among other areas, into serious commuter zones. Expect to hear more about Crossrail 2, running north-south through London. The preferred route goes from Cheshunt in Hertfordshire to Epsom in Surrey, and would bring a new rail link to Chelsea, with a station at King’s Road.



The Bakerloo line extension through south-east London to the border with Kent will also pop on to the radar. This upgrade would have a dramatic impact across a currently Tube-starved swathe of the capital.

Coming sooner is the Northern line extension to Battersea, with the prospect of a further extension to Clapham Junction, while government funding is in place for an extension of the Overground to Barking.

Stamp duty
New stamp duty bands are likely to have a negative impact on higher-priced properties. The upper rate of 12 per cent on homes worth more than £2 million means someone buying a £3 million property pays £63,750 more than previously. Inevitably, buyers will seek to compensate for this by negotiating price reductions.

However, the new stamp duty rates could well boost the market for lower-priced homes and those in the £450,000 to £750,000 bracket, where the savings will be felt most. First-time buyers of a £300,000 home now pay £5,000 stamp duty instead of £9,000.

The new bands will have a severe impact on the £1 million to £2 million family house market in areas such as Wandsworth, Battersea and Clapham, says Peter Mackie of buying agency Property Vision. “Buyers will have to stump up as much as £100,000. Some families will prefer to extend their current home but others will move out of London to find better value.”

Buyers now pay £93,750 on a £1.5 million purchase and this rises to £153,750 on a £2 million purchase. In general, house price rises are tipped to level off next year, though values will continue nudging up in regeneration hotspots such as Elephant and Castle and King’s Cross.


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