Brexit has created a buyers’ market in London property
Why you should invest now and buy Southall property
As we draw toward a close in the Brexit debacle (or not, as the case may be), new data has emerged to suggest the buy-to-let market is strengthening in the UK. This is especially true in London, which has regained its position as the major location for buy-to-let investors. In London, Brexit has created a buyers’ market. But where in London should you invest in property?
London is regaining its position as the number one buy-to-let location
As reported in news portal Landlord Today, increasing numbers of buy-to-let investors are seeing now as a good time to buy. The political uncertainty caused by Brexit has caused London house prices to stagnate. In some London boroughs, prices have edged lower. But, with Brexit delayed again, investors are being tempted to buy in London as they take advantage of:
- Low-interest rates
- A competitive buy-to-let mortgage market
- Stagnant house prices
- Booming tenant demand
This is the conclusion of new data from specialist buy-to-let broker Commercial Trust. It has announced that the number of mortgage applications from investors in London property increased by 4% in the first quarter of 2019 compared to the last quarter of 2018. London now accounts for 15.8% of all its business, compared to 14.5% for the South East.
London market is bottoming out
London estate agent Chestertons has noted signs that the London market is bottoming out. It could be that property prices in the capital will soon begin to move higher again. More people are registering as buyers, while fewer new properties are coming into the market. In February, Chestertons announced that since the start of the year it has seen:
- New buyer registrations increase by 35%
- Agreed sales increase by 12% year on year
- The number of new properties coming into the market down by 22% year on year
In addition, average rental yields in the London locations covered by Chestertons stood at 3.2% in December 2018, compared to 3.0% in December 2017. Guy Gittins, Chestertons’ MD, said, “Property values in the capital – particularly in prime locations – have now come down to a level that is proving increasingly attractive to potential buyers,” adding, “It’s not just local buyers who are coming to the market in their droves now, but investors too, who are seeing improved yields and good opportunities.”
At the time of writing, 61% of votes cast in a Landlord Today poll believe that now is a good time to buy in London.
Is Southall London’s hottest spot for investment?
In our market research, one location in London keeps pinging on our radar: Southall. This town in the borough of Ealing is undergoing a massive transformation. It’s close to Heathrow, will soon benefit from Crossrail, and is undergoing massive regeneration. It’s a great place to live, and the local population is expected to grow strongly for the next two decades. Here are just a few of the reasons why we think Southall is packed with potential for property investors.
Affordability and capital growth
Southall currently has some of the most affordable property in London. However, things are changing. While property prices across London have been languishing, Southall’s have been soaring. Estate agent Foxtons recently crunched sold property prices from the Land Registry and found that:
- In December 2017, the average sold price in Southall was £352,030
- In December 2018, the average sold price in Southall was £397,353
- Sold prices in Southall increased by 12.9%
When considered on an annual basis, the average sold price in Southall during 2018 was £378,639. This is up by almost 27% since 2015, when the average sold price during the year was £298,518.
According to the UK House Price Index, London’s average house price is £460,000 (February 2019), down from £536,000 in September 2015.
Southall property is outperforming London. The affordability gap is closing. We expect that this trend may continue.
According to home.co.uk, the average rent in Southall is £1,366 per month. This equates to an average rental yield of 4.1%. This is a third higher than the average rental yield across London.
Regeneration and investment
Investment has been flowing into Southall, from public and private sources. It is one of only 33 designated Opportunity Areas in London and boasts one of the capital’s most ambitious brownfield regeneration projects: Southall Waterside.
Over the next 25 years, Berkeley Group is developing a huge site next to the Grand Union Canal. Southall Waterside will provide 3,750 new homes, and deliver a new cinema, shops, a health centre and a primary school. There will be new parks and open spaces, and every home will be within a five-minute cycle ride of a station. The development will provide housing for 10,000 people. With the ONS forecasting that the population of Ealing will increase by 13% (around 46,000) by 2036, the new homes at Southall Waterside will be in high demand.
Southall is a Crossrail destination. When services start running here, Heathrow will be just eight minutes away. Liverpool Street will be only 24 minutes, and Canary Wharf just 31 minutes. Heathrow is set to expand, with another 40,000 new jobs created at the airport. Southall is set to become a major commuter location, within touching distance of three prime employment hubs.
We’ve been keeping a close eye on London’s property market since the EU referendum. It does seem that the market is bottoming out, and that now could be a window of opportunity to buy at great value for the long term. When considering exactly where to buy, Southall is like a magnet. Our focus keeps getting drawn there. The potential for profit is huge in Southall. But, as property price movement has shown since the referendum, the comparative affordability in Southall has narrowed. We expect that it will continue to do so. Our view is that Southall could provide some of the best returns for property investors who plan to invest in the next few months.
For more information about property investment opportunities in Southall, contact the team at Gladfish today.
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