London has long been considered an entirely separate entity from the rest of the UK housing market.
Over the last couple of years, house prices in the capital have remained relatively flat but wage growth has increased, making it 10% more affordable to buy a property there.
It has also seen an increasing demand for rental properties but a low supply of stock, resulting in increasing rents and healthy yields. In addition to affordable property prices and healthy rental yields, Tony Blair’s recent housing report states that we will see a 26% rise in prices by 2030 if the Conservatives carry out their manifesto proposals, so house price rises are on the horizon.
London based estate agent, Portico, has crunched the numbers and takes a look at the capital to reveal their top property hotspots for investors during 2020:
Barking & Dagenham
Average house price: £318,527
Average rental yield: 5.4%
Offering great value and high rental yields, Barking & Dagenham is expected to be boosted by future regeneration and investment projects, including planning permission having been secured for up to 10,800 new homes and shopping, leisure, community and healthcare facilities at Barking Riverside.
Average house price: £387,286
Average rental yield: 4.4%
With over £410m invested since 2012, Sutton is home to more than 6,800 businesses and is set for additional development and investment opportunities, which are expected to further unlock economic growth.
Average house price: £392,031
Average rental yield: 4.9%
Crossrail is coming to Havering with three Elizabeth Line stations from Romford to Harold Wood, which is expected to boost house prices. The riverside area of the borough is seeing an especially significant amount of regeneration, making it a top property hotspot.
Average house price: £421,226
Average rental yield: 5.5%
Offering great opportunities for first-time buyers and investors, Ilford has become a top commuter location and is home to the highest average rental yields on the list. Once Ilford Station has been connected to the Elizabeth line, there will be a train every five minutes during peak times into central London.
Average house price: £445,425
Average rental yield: 4.9%
Newham has seen significant regeneration since the 2012 Olympics, and a large part of the growth has caused the borough to see substantial property price increases and higher rental yields than London’s typical average.
Average house price: £488,632
Average rental yield: 5%
House price increases in Redbridge are expected to outpace other London boroughs by 17% during the next five years, according to Homes & Property. This offers homebuyers and investors a chance to potentially see impressive capital growth.
Average house price: £497,758
Average rental yield: 4.7%
Despite being one of the most expensive boroughs on the list, Hounslow offers larger sized homes for lower prices, which are hard to come by in Greater London.
Average house price: £545,550
Average rental yield: 4%
Home to one of the most varied demographics, Tower Hamlets has a wide range or properties, and a large number of tall buildings are in the pipeline, illustrating the borough’s growth and development.
East London boroughs lead the way
In Portico’s list of the best eight places to buy property in London, six of the top areas are located in East London, including Barking & Dagenham, Newham, Tower Hamlets, Redbridge, Havering and Ilford. This region has seen a significant amount of regeneration and is becoming a sought-after location for homebuyers, investors and tenants as house prices, rental demand and population are forecast to see extensive growth.
West London and South London are also represented on the list with Hounslow and Sutton rounding out the top eight places to buy property in the capital.
Affordable properties & lucrative rentals in Barking & Dagenham
As one of the best places to invest in London, Barking & Dagenham is home to the most affordable average house price on Portico’s list with £318,527. And the borough’s average rental yield is the second highest on the list with an impressive 5.4%.
Having easy access to central London via the District Line, Barking & Dagenham offers an attractive location, and a new rail link is also being constructed to further improve the borough’s connectivity. Major investment and regeneration projects are also coming to the area, which are expected to boost property prices and population growth.
The most affordable places with average prices under £400,000
The second most affordable place on the list is Sutton with the average property price of £387,286. Located in Zone 5, the borough boasts close proximity to central London, while being on the doorstep of the attractive Surrey countryside. Sutton’s small district centres have even retained a village feel not often present in Greater London, making it an especially attractive place to live and invest in.
Another top property hotspot with an average property price below £400,000 is Havering with £392,031. Boasting an average rental yield of 4.9%, the borough has become a hub for start-ups and expanding businesses. As more employment opportunities come to Havering, more young professionals will likely be attracted to the area.
The most lucrative rental yields
With the highest average rental yield on the list of 5.5% and the average property price of £421,226, Ilford is home to great investment opportunities for first-time buyers and investors. Ilford is also being transformed into a top commuter location, and the infrastructure improvements are spurring regeneration across the region.
Following Ilford and Barking & Dagenham, Redbridge has the third most lucrative rental yields on the list with an average of 5%. It’s an especially liveable part of London with approximately a quarter of the borough being covered by green areas, award-wining parks and forest.
Redbridge is also known for its top schools with 14 outstanding primary schools in the area, according to research from Portico. The borough is also home to the third highest proportion of children in the UK, making it one of the most family-friendly places in Greater London.
Following close behind in terms of yields is Newham with an average rental yield of 4.9%. Newham has seen a significant amount of regeneration and growth since the 2012 Olympic Games. Over the years, the borough has become a cultural hub and exciting developments and new jobs keep coming to the area. To see more in depth analysis on rental yields, click here
The pricier boroughs hiding affordable opportunities
Tower Hamlets is the most expensive place on the list of the top places to buy in London with an average house price of £545,550. Prime areas like Canary Wharf push up the average property price, but there are more affordable options popular with younger families in the east end.
As the second most expensive place on the list, Hounslow has larger sized homes on offer with an average property price of £497,758, and the average rental yield is still an impressive 4.7%. With access to highly rated schools and green space, Hounslow is an especially attractive location for families.
Vatche Cherchian, Portico’s Regional Director, said: “While house prices in London have remained relatively flat over the last couple of years, wage growth hasn’t. We’ve actually seen a 4% growth year-on-year in wages. And if you tally that wage growth increase up against flatlining London house prices, what you’re saying in real-terms is that it has become around 10% cheaper to buy a property, which is encouraging.”