The first thing you need to realise about buying in the London property market is that it isn’t the same as buying anywhere else in the UK. Here are some strategies that will help you survive the London property market and find the best property buys in London:
Put everything in context. London is one of only two Alpha++ global cities. That means it is one of the most globally connected, and most important cities for business, on the planet. London has the UK’s highest jobs growth and highest new business growth. People from all around the world are flocking to live and work here – the ONS forecast the population will rise by 1.1m to over 9.4m people by 2022 alone.
Think of it in these terms and you’ll see it’s actually pretty good value for money. There are lots of smaller capital cities around the world where people would never dream of being able to buy a property. At least in London it is still possible. (Some might even say a bit cheap!)
Better districts always perform best in the long term. In the last couple of years some secondary locations have done quite well but in the long term the best, most popular locations always win through. According to Savills for example, property prices in Fulham rose 160% between 2004-2014, while out in Hounslow only (yes only!) by 100%.
Buying property in London is one case where it really can make financial sense to stretch your budget, and where buying in secondary locations can actually make less sense than it might appear.
Beware the up-and-coming. The main snag with up-and-coming areas is that they usually take a long time to up and come, if at all. Islington took 40 years to become a desirable area. Battersea was up-and-coming in the 70s and, some might argue, still hasn’t arrived.
Buy anywhere described as up-and-coming and you could be waiting a generation for it to become the place you really want to come home to.
Measure that commute …. but with a stopwatch. London-dwellers travel further and spend more time doing it each week than anywhere else in the country. And this is another important difference – they tend to measure their journeys in time taken not distance.
When an estate agent says the most desirable properties are ten minute’s walk from public transport and 30 minute’s travel time into central London you know they’re being 100% honest with you. (But time it yourself, just to make sure!)
Adopt some Japanese home buying techniques! Buyers elsewhere might think in square metres but, increasingly, London buyers measure space ‘Tokyo style’ – in square centimetres. A property with that extra bit of space – a roomier living room, kitchen or extra bedroom – will be more liveable, be more future-proofed and appreciate in value better.
Tip. London properties that genuinely have potential to build on or up are starting to become quite scarce. If you can find one within your budget – even if you don’t plan to extend right now – buy it!
Older can be better. Slick new city living developments conjure up images of a slick new lifestyle, but can often be poor value for money. Research by CBRE in 2012 revealed that new properties in London cost on average 30% more than older properties of a similar size. (In Kensington and Chelsea 55% more.) Plus, these kinds of developments are often pitched at foreign buy-to-let investors with lots of money to spend in a market they don’t understand.
Period properties have always been sought after by owner-occupiers and now they’re better value for your money too.
Condition is far LESS important when buying in London. Think of it this way: Average London prices are a crazy 250% higher than the rest of the UK at time of writing. But, on average, renovation costs are only a very reasonable 15% more. So, buying a property that needs fixing up can produce an impressive return on your money.
In London, it really does make sense to buy the worst house in the best street.
Lastly remember, buying in London has never been for the faint-hearted. Back in 1975 your average flared-jean-wearing, Beetle-driving couple would have searched high and low and scrimped and saved to buy a flat in Notting Hill for £22,000 (the then average price here). It sounds cheap, but it wasn’t even then.
If you can get the notion that you’re facing a mission impossible (it’s not impossible to buy in London, just very, very hard!) when buying in London out of your head you’ll be in a much better position to buy wisely in the London property market.