Buying a house or flat in inner London Zones 1-3: why record numbers of home buyers are heading back to the capital's central zones

The tide is turning. After years of leaving London in search of value, home buyers are returning to the convenient central travel zones. 
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Anna White14 August 2019

Home buyers are falling back in love with London, especially in travel Zones 1 to 3, with estate agents reporting an increase in viewings and offers.

The number of offers made in the second quarter of this year was the highest three-month figure for 10 years.

This follows at least five years of paralysis in the housing market in Zones 1 to 3, thanks to conspiring factors including “stretched affordability”, where price growth raced ahead of wage inflation and the stamp duty burden grew amid a prolonged period of political uncertainty.

Global appeal: Zones 1 to 3 have seen years of housing market paralysis, but recent figures have started to tell a different story  
Shutterstock / Engel Ching

This summer, however, figures started telling a different story, with central London showing it continues to have global appeal.

Five popular London areas for movers

In the past two years the gap between those leaving the capital and those moving in has narrowed to a historic low. Richard Brown, Centre for London analyst, reports new data showing that the capital’s population rose one per cent in the 12 months to mid-2018.

Growth was driven by more people moving here from abroad in the year to June 2018, some 35 per cent higher than the previous year.

There was a six per cent increase in the number of foreign nationals moving to the capital — no doubt attracted by the cheap pound —combined with a 17 per cent drop in the number of people leaving London to live abroad.

The highest growth happened in the inner boroughs of Camden, Islington, Hackney, Tower Hamlets and Newham, a stone’s throw from the capital’s mega-priced core.

From £525,000: flats and townhouses at King’s Holt Terrace in Kensal Rise, a prime Zone 2 location

Inner London is still a buyers' market

“Property prices in inner London have fallen between 10 and 20 per cent since the peak of 2014, so it is still a buyers’ market and we are seeing lots of cheeky offers,” explains Knight Frank’s Liam Bailey. But the number of exchanges were up for the first six months of the year.

New research exclusive to Homes & Property measured the appeal of central London. The city-wide survey by estate agent LiFE Residential discovered that Kensington & Chelsea had the highest neighbourhood happiness rating at 80 per cent, with Camden coming second.

The lowest scores were recorded in the outermost boroughs of Greenwich, Bromley, Harrow, Hounslow and Sutton.

Most of Kensington & Chelsea is definitely for the rich, but regeneration is under way on the borough border.

City & Docklands has planning permission for 164 new homes on the edge of the Government’s £250 million Old Oak and Park Royal regeneration scheme which will be centred around a High Speed 2 and Crossrail transport hub.

North Kensington Gate, comprising three towers, will be a nine-minute walk from Kensal Green Tube station in Zone 2, and a short stroll from Ladbroke Grove.

Another new scheme handy for Kensal Green Tube is EcoWorld London’s King’s Holt Terrace. This collection of one- and two-bedroom apartments and four-bedroom townhouses is built around a new sports centre and prices start from £525,000. Call 020 8066 2255.

It’s off the quirky and cultured Chamberlayne Road, described by Time Out as “Queen’s Park without the prams”, and home to the independent Lexi cinema.

Inner London hotspots

The popularity of Hackney is unwavering, it seems. Annual price growth from June-to-June has only dipped once since 2011 and Hackney homeowners saw average annual price growth of 5.67 per cent in the 12 months to May this year, according to Land Registry data.

Popular spot: Hackney's appeal is unwavering, it seems, with average annual price growth of 5.67 per cent since May last year
Daniel Lynch

The Otto is a new scheme by Londonewcastle overlooking Hackney Downs with one-, two- and three-bedroom apartments starting from £490,000. Help to Buy is available. Visit theotto.co.uk or call Cushman & Wakefield on 020 3296 2222.

Following the central London slowdown, mansion flats in Maida Vale look to be “good value”, says Knight Frank’s Liam Bailey, with prices per square foot sinking from £1,200 to £900.

Rokstone’s Becky Fatemi agrees. “The regeneration of Edgware Road and new developments, like Lyons Place, are making the area accessible,” she says.

Designed by architect Sir Terry Farrell, Lyons Place has one- and two-bedroom flats and townhouses with balconies, roof gardens and courtyards, underground parking and bike storage. Prices start from £795,000. Call 0207 580 2030.

Wapping, Zone 2: homes are available at London Dock where last week 28 flats were launched with prices from £166,600 for first-time buyers

The Olympics effect keeps on giving

According to the Centre for London, Tower Hamlets and Newham had the highest influx of people over the last 10 years, up 37 per cent and 27 per cent respectively. The centre’s Richard Brown puts this down to rapid gentrification and the Olympics effect, which just keeps on giving.

New lower-cost homes are available at London Dock in Wapping, Tower Hamlets. Last week the developer St George launched 28 first-time buyer flats with prices from £166,600 for those with a maximum household income of £45,000 per year. That buys a 33 per cent stake. Call 020 7971 7880 or visit londondock.co.uk for further information.

For those with a bigger budget, 119 luxurious loft apartments are for sale in Shoreditch in the Long & Waterson building. With prices from £665,000, there’s a concierge, balconies, communal gardens and a roof terrace. Contact Knight Frank on 020 7718 5202 for more.

Fit the bill: London Dock's first-time buyer flats are available to those with household income below £45,000 

Regeneration sparks new homes building on central London's edge

Bold commentators are calling the bottom of the inner London market. Opportunist vulture funds are picking up unfinished conversions cheaply from developers that have gone bust, while overseas investors, buying in dollars, are getting a substantial discount.

The appointment of a new Prime Minister has helped sentiment. “We have been craving certainty,” says boss of developer West Eleven, Will Herrmann. “Support him or not, Boris Johnson brings hope.

“In the autumn I expect to see sales activity as people take advantage of the drop in prices.”

Herrmann predicts the Prime Minister will lower stamp duty, saying: “He will do anything to stimulate the economy before Brexit.” But he also cautions: “A general election or protracted withdrawal from the European Union could knock the recovery.”

The trend of the last five years has been a move to outer London in search of space and value. But with regeneration in Zones 2 and 3 delivering new homes on the very edge of central London, buyers are beginning to decide to stay.

Getting on the ladder in Zone 3

Tanya Revell and her partner Brad, 41, relocated to London from the US three years ago and rented in Balham.

Determined to get on the ladder they have bought a three-bedroom apartment in The Essex Brewery scheme by Crest Nicholson in Walthamstow, Zone 3, a short walk from Hackney Marshes.

Fans of inner London: Tanya Revell and her partner Brad relocated from the US and have bought a flat at The Essex Brewery in Walthamstow
Richard Eaton

“Living in inner London gives us the convenience of transport while also having easy access to forests, parks and quaint neighbourhoods,” says Tanya, 44.

Two-bedroom apartments at The Essex Brewery are available from £532,000 with Help to Buy. Visit crestnicholson.com/the-essex-brewery or call 020 3437 1603 for more information.