London’s property market is the scene of a full-scale bargain hunt, as buyers cascade towards the outer boroughs in search of an affordable home.
Property prices in some of the cheapest locations are showing the strongest annual growth, according to the latest UK House Price Index, earning existing home owners tens of thousands of pounds in paper profit.
Prices in central London, meanwhile, are flat or even falling. The result is a “baked Alaska” pattern of house-price growth in the capital — hot on the outside but ice cold in the centre.
Newham leads the way with annual price increases of 23.7 per cent, hiking the average from just over £300,000 in August last year to almost £373,000 in August this year, “earning” home owners an average profit of well over £70,000.
Across England average prices are up just 9.2 per cent year on year, to almost £236,000.
LONDON'S BEST PERFORMING BOROUGHS
Other strong London performers include Havering, where prices surged 19 per cent in the past year to £350,000 — meaning that on average home owners in the borough have earned more than £55,000 equity in 12 months.
Growth was almost as strong in Waltham Forest —up 18.9 per cent year on year to an average of £436,000 — a cash increase of close to £70,000.
Barking & Dagenham, London’s most inexpensive borough, saw price growth of 17.1 per cent, to an average of £283,000, up from £242,000 a year ago, a increase of about £40,000.
The Price Index figures suggest that many of the buyers in these locations are property novices, with the number of first-time buyers in London up more than 13 per cent year-on-year, and 1.3 per cent month on month.
This is despite the fact that the average price of a first home in the capital has now reached £427,685, well over twice the national figure.
CENTRAL LONDON SLOWDOWN
The enthusiasm for low-cost boroughs is matched by a cooling of interest in homes across central London. The worst-performing borough in London is Camden, where prices have slipped almost three per cent to £798,000 – representing an equity loss for owners of almost £22,000.
Kensington and Chelsea managed a 1.5 per cent price rise, and prices in Westminster rose by three per cent.
“We are seeing a complete reversal of where we were five years ago,” said Lucian Cook, director of residential research at Savills. “The market has reached the point where there is much more capacity for price growth in the outer London boroughs.”
Cook believes a key reason for price growth in outer London is that increases in stamp duty and tougher mortgage lending rules have pushed “quite affluent buyers” into areas “which they would not have considered five years ago”.
And with the impact of Brexit yet to be fully known, he believes price growth in the capital over the next year will be cautious. “Outer London will continue to outperform inner London, but with more modest growth,” he said.