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.

The post How to take on the London property market …. and win! first appeared on Property Insider.

Some commentators are putting the blame for this squarely on the shoulders of Brexit and business-related worries. But, analysis of data on newly built London apartments, suggests it isn’t the only, or even the main reason.

“There’s no doubt that Brexit is playing a part in people’s willingness to pay higher rents in London,” said Guaranteed Rent Specialists, Assetgrove. “However, there are other factors at play too, with the supply of new apartments chief among them.”

London property management firm London Central Portfolio, (LCP) agrees. Its research shows the supply of new apartments has risen by 22,000 in the three months of 2017. And, not all of them have been let immediately, or at the advertised rent level.

Specifically, the data points to new build activity south of the iconic river Thames – in Battersea through to Nine Elms – that’s pushing London rents lower.

South London New Builds

Post codes SE11, SW11 and SW8 have experienced a quick succession of new-build completions. But, that fast pace of work appears to be enough to satisfy current levels of demand for the new homes. It’s also been a bit of a boon to tenants, who are more able to make a lower rental offer and even walk away if they don’t like the price, or apartment.

The data shows:

• 1% increase in south London rental properties.
• Number of rental properties that have actually been let in south London down 14.8%.
• A 6% decline in the level of advertised rents in the first quarter of 2017 versus 2016.
• Achieved rents for the area 2.8% lower than the final three months of 2016.

“The numbers clearly show that right now, demand for new build rental homes in the Battersea area has been met,” said Eden Harper, estate agent in Battersea. “However, it’s safe to say this isn’t the case all over London, which confirms Brexit is far from the only detail that affects the rental market.”

Popular Period Properties

Elsewhere in London, landlords aren’t seeing the same market dynamics. Where the number of new builds has been lower than south of the river and there’s a good supply of period properties, activity remains robust.

Demand for central London period properties hasn’t fallen and nor have rents paid for them. In fact, they’ve risen 1.5% and the number of properties that have been rented has risen 2.5%. At the same time, new build stock levels have risen by just 5%, almost one sixth of the increase seen around Battersea.

This, more than anything else, underscores that the central London rental market is thriving. Even as demand elsewhere has slowed.

“Period properties are always popular, particular where the stock is in a good location and well-maintained,” said Lawsons & Daughters, estate agent in Fulham. “London’s rental market is mimicking the sales market – the right properties in the best locations remain popular while potential tenants of properties a little further out are able to be more selective and bargain harder, too.”

Power Shifts from Landlords to Tenants

The divergence between the fortunes of Central London period properties and new builds south of the river, is clear. However, the overall trend across London still remains one where tenants have more bargaining power than they did. As tenants have more options, landlords can no longer demand the rent of their choosing.

With most BTL landlords playing a long-term game, this change in rental market dynamics shouldn’t harm them. Although, if rents move too low and stay there too long, that could change. But, the beauty of property is that it can always be sold if the market doesn’t recover.

It’s likely there will be a few more years of uncertainty and rises and falls in rental market activity. Looking beyond Brexit and the current influx of new build completions, the population is still set to grow and London will always be popular. That should mean most landlord’s investments are safe, with demand expected to recover – eventually.

Guest post provided by Property Division.

The post New Build Completions Rise as London Rents Fall first appeared on Property Insider.

The data shows there were just 55 transactions in the whole of the Westminster borough in February this year*, the lowest ever number recorded by Land Registry open data, and 60% lower than in February 2009 immediately after the last market crash.

Portico’s research shows that there is a clear correlation between General Elections and sales transactions, hence the agent forecasting sales volumes to further decline until the General Election vote on June 8^th.

Historically, low levels of sales transactions in central London have pushed people further out of the capital, but Portico’s data shows falling volumes are now a problem across the whole of London.

There were just 105 sales transactions in the south London borough of Wandsworth** this February, compared to 370 the year before, a staggering 72% decrease year on year. Likewise, Land Registry data shows there were just 82 sales transactions recorded in the east London borough Redbridge in February, compared to 260 the year before, a 68% decrease year on year.

According to the agent’s research, the market should experience a spike of activity post-election however, when certainty in the market is restored. After the last election in 2015, Wandsworth and Westminster experienced a 28% average increase in sales transactions in the three months post-election, and Redbridge saw an ever bigger 34% average jump in activity.

Robert Nichols, Managing Director, Portico, says: “Currently, transaction volumes, or the number of homes being bought and sold in the capital are at an all-time low. The drop in transactions is in part explained by a big jump in sales in the run-up to April last year, when the change to stamp duty taxes came into effect, followed by an immediate fall. Since then, volumes have dropped to historic lows, and Theresa May’s decision for a snap general election will further subdue the market.

“We are expecting to see some improvement in volume post-election, but at best we expect volume to track at -5% year on year to summer 2016, when volumes failed to recover after the stamp duty changes.

“We cannot say for certain what impact a boost in market activity will have on property prices, but historically there has always been a slight increase. If we look at the last election, house prices rose by 2.4% in Wandsworth in the three months following the vote, 4.6% in Redbridge and 1.7% in Westminster. Similarly, in the election before that in 2010, property prices rose by 1.8% in Wandsworth, 2.5% in Redbridge and a staggering 19% in Westminster in the three months after the election.”

Guest post by Portico estate agents.

*The latest data available on Land Registry. We acknowledge that often there is a lag to LR data and so there may be an increase to the February numbers. But if you look at January numbers (as it’s now the end of April), Westminster had 137 sales transactions, and the lowest number ever recorded in the borough since 1995 was 136 (after the last market crash). Therefore even if February’s number (55) doubles after a lag(!), it will still be the lowest ever recorded number. And as we know, what happens in Westminster tends to ripple out to the other London boroughs.

** Westminster generally leads the London property market, so what happens here tends to ripple out to other boroughs.  We chose Redbridge and Wandsworth to give a broader view of the London market.

The post London sales transactions at lowest ever recorded volume pre-election first appeared on Property Insider.