18th-century banking posterboy, Baron Rothschild, is widely believed to have said: "Buy when there is blood in the streets, even if the blood is your own.”
Buying anything aside from the essentials during a time of crisis seems counter-intuitive to most and risky even amongst the most experienced investors. However, there may be something in this, as newly released research from track Capital reveals.
Property is broadly considered as a good area of investment during a recession. As the UK grapples with what many are predicting to be the worst recession in 300 years, London property investment company, Track Capital, has identified the places where investors would have made the most gains had they purchased property in the global economic crisis of 2009.
London’s Notting Hill leads the way, achieving a 376% increase, translating to an approximate average gain of a staggering £2 million per dwelling.
In fact, London’s boroughs make up the majority of the top twenty locations on Track Capital’s list, with Dulwich (253% value uplift), New Cross (193%), Clapton (180%), and Southgate (172.78%) completing the list of the top five areas with the greatest gains.
But while the inflated price of London’s housing market will come as a surprise to no one, there have been significant value increases outside of the capital too.
In the CB3 area of Cambridge, the average property value has increased by almost £500k – a 164% uplift. Properties in Clayhall, Essex, have risen from an average of £213,500 to £559,224 (a 161% gain). In Manchester’s Hulme, houses have gained 153% value. Virginia Water in Surrey has seen property prices surge to almost £2m, with a 147% increase.
While previously affordable homes in St Leonards, East Sussex, have seen a value increase of 140%, with houses previously valued at £105,826, now selling for £254,332, which would take them beyond the reach of most first-time buyers.
However, it’s not only property sale prices that have increased. Anyone who invested in buy-to-let property will have benefitted too. In the MK9 postcode area of Milton Keynes, anyone who invested in a rental property which delivers a gross rental yield of more than 5%, will have seen a 109% increase. Taking the value of their purchase from £122,684 to £256,500.
Nick Hyland, Track Capital’s Director, commented: "You don’t need figures like this to understand that property value in London has skyrocketed in recent years, but I suspect that the magnitude of the ten year uplift in areas that we’ve long considered trendy, such as Notting Hill, will come as a surprise to many.
"But the really interesting part of this research is how the areas outside of London have fared. Our research reiterates how well the South East of the country has performed since 2008. Over the next 10 years, I expect to see some of the North West’s postcodes perform in a similar manner as they enter the relevant stage of the property cycle, as regeneration takes place and transport links improve.
"And this type of medium-to-long term analysis simply reinforces the benefits that buying in a softer market can bring."