Buying beats renting in Aberdeen, but it pays to rent in London

• Buyers in Aberdeen will be £99,000 better off compared to renters after 7 years
• Dundee, Glasgow, Cambridge and Edinburgh also compelling to buy vs. rent
• Buying in London with a 10% deposit takes 18 years to become more cost effective than renting
• Bournemouth, Huddersfield, Bedford and Swansea also make sense to rent not buy

Aberdeen is the most cost-effective town in Britain for buying property compared to renting. Over a typical seven year period, the average property owner in the Scottish town can expect to be £99,040 better off compared to the equivalent renter, according to research from property website Zoopla.co.uk.

The latest Rent vs. Buy analysis from Zoopla shows that it takes buyers in Aberdeen with a 10% just one year of ownership for buying to become more cost effective than renting. The average property price in Aberdeen is currently £206,060 with average monthly rents at £1,275.

London is currently the most renter-friendly location in Britain. After seven years, a typical London renter would be £82,412 better off than a buyer with a 10% deposit of an equivalent property. It would take 18 years for a London buyer with a 10% deposit to begin to be financially better off compared to the equivalent renter. These calculations are based on a conservative estimate of 4% annual house price growth in the capital.

Bournemouth is the second most renter-friendly town in Britain. With average asking prices of £380,206 and average rents of £1,024 it would take twenty two years for a buyer with a 10% deposit to be better off compared to a renter in an equivalent property. After a seven-year period, a typical renter in Bournemouth would be £30,719 better off than a typical buyer with a 10% deposit.

Lawrence Hall of Zoopla.co.uk said: “Despite taking longer to be better off financially, London remains the holy-grail in terms of property investment. It is much more buyer-friendly outside the capital but with rising average prices and low savings rates, accumulating a deposit has become increasingly difficult. It is important to remember that whilst renters may be better off in the short to medium term in some areas of the country, buyers are making a long-term investment. With most buyers opting for mortgage terms of 25 years, over the long term, buyers are likely to be better off compared to those who choose to rent.”

The Zoopla Rent vs. Buy methodology compares all of the costs associated with buying or renting as well as increases in asset or savings value over time. The analysis forecasts the amount of time it will take for buying to become more cost effective than renting across the largest towns and cities in Britain and compares how much buyers or renters are financially better off after the average tenure of a house.

BEST LOCATIONS FOR BUYING

Location	Av. Asking Price	Av. Monthly Rent	Amount buyers are better off after 7 years (10% deposit)
Aberdeen	£206,060	£1,275	£99,040
Dundee	£96,103	£653	£54,378
Glasgow	£139,841	£722	£40,971
Cambridge	£337,586	£1,334	£28,878
Edinburgh	£224,000	£948	£32,725
Coventry	£191,833	£849	£33,730
Newcastle	£180,516	£812	£33,726
Manchester	£178,069	£781	£29,751
Milton   Keynes	£264,038	£1,066	£25,345
Birmingham	£163,594	£719	£27,171

Source: Zoopla.co.uk (February 2014)

 

BEST LOCATIONS FOR RENTING

Location	Av.   Asking Price	Av.   Monthly Rent	Amount   renters are better   off after 7 Years (10%   deposit)
London	£896,124	£2,619	£82,412
Bournemouth	£380,206	£1,024	£49,082
Huddersfield	£177,119	£561	£7,680
Bedford	£288,598	£959	£7,306
Swansea	£185,373	£631	£204

Source: Zoopla.co.uk (February 2014)

FOUR IN TEN LANDLORDS EXPECT TO RAISE RENTS OVER NEXT 12 MONTHS

• 42% of landlords expect to increase rents in the next twelve months
•              One third expect to increase rents by over 1% in 2014
•              Average estimate of 3.7%, down by 0.9% compared to December 2012

Four in ten landlords anticipate they will raise rents in the next year, according to a landlord sentiment survey conducted by LSL Property Services plc, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.

Overall one third of landlords expect they will raise rents above 1% in the next twelve months, with an average estimate of 3.7%, down by 0.9% compared to December 2012. Currently, average rents are rising at an annual rate of 1.5%, according to LSL’s latest Buy-to-Let Index.

Out of those that expect to increase rents, 56% indicated they will do so to cover the cost of inflation. While conversely over half (57%) expect to leave rents unchanged in 2014.

David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, comments: “Even with an increase in rental properties available, demand in the private rental sector continues to outstrip supply in many areas, especially in London. In the months ahead, this will enable landlords to push up their rental prices when letting their properties, putting a stop to inflation from eating into their rental income. This is underlined by the fact that covering the cost of inflation is the main reason cited by landlords expecting to increase rents.

“With demand rising, greater emphasis must be on the supply of homes. While the government plans outlined are a welcome move, this is only the start of the long-term solution.”

With current yields at 5.3%, property investment is proving to be a worthwhile alternative to historically low annuity yields and a volatile stock market. Taking into account both capital accumulation and void periods between tenants, total annual returns on an average rental property increased to 8.8% in December, compared to 8.3% in November, reflecting the growth in house prices.

David Newnes, director of LSL Property Services, owners of Reeds Rains and Your Move, comments: “Rising rents are delivering strong yields to investors, making a powerful case for the rental market for those in search of a beneficial, long-term investment.

“However buy-to-let investment is not a license to print money, and it requires the same level of research and planning as any other business investment. The success of the investment depends on the property remaining occupied to deliver ongoing rental income. Before taking the plunge it is important to be aware of factors such as the location of the property, which can determine the level of tenant demand. For instance, those nearest to transport hubs will usually be of the highest demand, especially in larger cities like London.”

FALLING VOID PERIODS

December experienced annual growth in lettings activity, with new tenancies agreed across England and Wales up by 7.7% compared to December 2012. As a result, void periods in private residential property in the UK have fallen, helped by this solid tenant demand. As the UK lettings market powers ahead in 2014, landlords shall continue to benefit from falling void periods, while tenants will face intense competition for the best properties.

David Newnes, concludes: “While void periods are falling, the private rented sector gives tenants flexibility, so as tenants’ circumstances change; there are still occasions when a property might be empty.  Of course, it is in every landlord’s business interest to maintain good, long lasting tenancies and avoid voids. At a time when demand far outstrips supply, it is imperative that empty properties are filled quickly, following any necessary maintenance and improvements. Landlords can minimise void periods by talking openly with their tenants about their future plans – in order to prepare for when the property might be empty. Overall there’s an air of optimism surrounding the rental market now that inflation is firmly back on track as wage expectations start to improve. A rise in affluent tenants will help further boost the success of the private rental sector this year.”

London kitchens – a thing of the past?

Kitchens are shrinking dramatically in size and prominence in new London homes and conversions, according to the latest research from estate agents Marsh & Parsons.

Falling victim to the changing eating habits of modern-day Londoners, kitchens now account for a smaller proportion of the total living space in new build developments and conversions in the capital than ever before.  Today’s London residents are eating out more – up to an average of four times a week in 2013.  This fuelled a boom in the London dining scene last year, with a new restaurant opening for every day of the month at its peak.

Only half of a typical Londoner’s total weekly lunches and dinners are now prepared in kitchens at home.  And as the average size of UK new builds gets smaller, it is the kitchen which is bearing the main brunt of this fall in square footage.

• Example 1: A two bedroom flat in a Barnes development comes with a kitchen of 6.5 sqm (or 70 sq ft). This is merely 7.9% of the gross internal area of the apartment and roughly half the size of an average car parking space.

http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Wrenn-House-Brasenose-Drive-London-SW13/BAR130164

• Example 2: The kitchen is equal to only 7.3% of the property’s entire internal area in a two bedroom, two bathroom Albert Embankment apartment in Prime Central London.  At just 6 sqm (65 sq ft), this shows kitchen size has shrunk by a third since the 1960s, when the average British kitchen in a post-war new build was 8.8 sqm (95 sq ft).

http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Albert-Embankment-London-SE1/PIM120096

As a result, over a third of residents in new build developments report they don’t have enough space for everyday kitchen appliances such as toasters or microwaves, or to invite guests over for dinner in their home.

Charles Holland, Lead Director of Residential Developments and Investments at Marsh & Parsons, comments: “The whole way we socialise as a city is changing, and marginalising the kitchen as the traditional hub of the home. Aware of the changing lifestyle of our capital’s young professionals, developers of the latest London apartment blocks are prioritising living space, bathrooms and nearly all else over kitchen size.

“Londoners today are increasingly following in the footsteps of New Yorkers, preferring to eat out and meet friends in a restaurant than host dinner parties. As such, kitchen size is no longer as important to many young professional buyers, and is often at the bottom of the pile in property wish lists”.

Marsh and Parsons have identified that among new build properties coming onto the market, separate kitchens are increasingly rare – with open plan kitchen-diners generally the norm.

• Example 1: A two bedroom flat in a renovation of a former Victorian hospital in Clapham provides only one large open plan reception space to act as combined kitchen, dining and living area.

http://www.marshandparsons.co.uk/new-home-for-sale/2-bedroom-Flat-for-sale/Jeffreys-Road-London-SW4/RDI130042

• Example 2: A one bedroom apartment in a modern riverside development in Pimlico incorporates a modest galley style kitchen into a single reception room.

http://www.marshandparsons.co.uk/property-for-sale/1-bedroom-Flat-for-sale/Eagle-Wharf-138-Grosvenor-Road-London-SW1V/PIM130001

Peter Rollings, CEO of Marsh & Parsons, comments: “With less and less time spent preparing meals in the home, we are starting to see the kitchen completely disappear as a room in its own right, and instead being subsumed into the wider living and dining space.  Once a means of space-saving in tiny apartment blocks, combined kitchen-diners are now necessary for many house-hunters, and much more practical than a separate kitchen.  Looking to the future, it begs the question whether the London kitchen is about to do a disappearing act on us altogether, or whether it has already ceased to exist as a must-have space?” 

 

News Headlines – Sunday 22nd December

Property

The Royal Institution of Chartered Surveyors predicts average house prices will rise in Britain by 8% next year and last Thursday the Council for Mortgage Lending revealed that the amount of money lent to borrowers in November rose to £17bn, up by more than 30% on the same period last year. Andrew Bailey, deputy governor of the Bank of England warned homebuyers there will be a clampdown on house purchases if there is any evidence that rising prices are spiralling out of control. Mortgage lending is overseen by the Prudential Regulatory Authority (PRA) which has the power to make banks hold back more money on balance sheets for every mortgage offered and can reduce loan-to-value ratios, making products such as 95% mortgages more expensive for homebuyers. Mr Bailey said controls could include strengthening the tests buyers have to go through before acquiring a mortgage and increasing the amount of capital banks have to hold against household lending.

Economy

Advanced economies will get their ‘mojo’ back in 2014 as the UK wins back medal as the fastest growing major European economy next year according to recent headlines. PwC said Britains; brighter growth prospects could also move it in line to be the fastest growing economy in the G7. The UK economy is expected to grow by 3% next year which would move it closer in line with America for the title of the strongest growing advanced economy in the world. There’s an air of optimism, as improving consumer confidence is expected to result in higher business investment. Despite the long journey towards recovery, for the first time people feel things are really starting to pick up.

Personal Finance

Shoppers are expected to splash out more than £5 billion in just four days in a boost for flagging retailers. Last weekend was said to be the busiest of the year for the high street with 31 million visits over two days. Barclays predicts that £5.2 billion will be spent on credit cards between yesterday and Christmas Eve and more than £1.1 billion will be spent on Tuesday alone as a vast proportion of people have left their Christmas shopping late due to the fact Christmas falls midweek.

Number of British Property Millionaires Climbs by a Third in 2013

 

• 92,985 new property millionaires created across Britain in 2013 (255 per day)
• 61% of all Britain’s property millionaires can now be found in London
• Kensington and Chelsea home to highest number or property millionaires
• Wales is British region with the fewest number of property millionaires

Continued strong demand for prime residential property throughout 2013 has created 92,985 more property millionaires in Britain over the past 12 months, according to the latest research from property website Zoopla.co.uk.

The total number of British property millionaires now stands at 393,127, up 31% compared to this time last year, with a high concentration in London and the South East as a result of strong house price growth at the top-end of the property market. As 2013 draws to a close, 1.4% of British homeowners will finish the year as property millionaires.

61% (239,703) of all Britain’s property millionaires can now be found in London. Limited supply of prime property in the capital has pushed the value of a further 57,120 London homes over the £1 million mark in the last 12 months, creating 156 new property millionaires in the capital every day throughout 2013.

The exclusive borough of Kensington and Chelsea is home to the highest number of property millionaires totaling 41,393 (17% of the capital’s total), despite being the smallest London borough covering just 12km². Westminster (40,087), home of such famous Monopoly addresses as Mayfair and Park Lane, and Camden (23,873) round out the top three London boroughs with the most property millionaires.

Outside London, 21,028 more property millionaires were created in the South East during the past year, bringing the total to 82,614. The highest proportion of property millionaires outside the capital can be found in the affluent Surrey area of Virginia Water (GU25) where 32% of homes are now worth over £1 million. Beaconsfield (HP9) and Chalfont St Giles (HP8) come in second and third respectively for having the highest proportion of million pound homes. Wales is home to the fewest property millionaires in Britain, numbering just over 1,000 in total but still up 24% on 2012.

Lawrence Hall of Zoopla.co.uk said: “While Government schemes such as Help to Buy have concentrated popular attention on the lower rungs of the property ladder this year, there’s been a hive of activity propelling house price growth at the top-end of the market. As more and more British properties climb past the million pound level, the impact of a possible Mansion Tax would be wide reaching and risk impacting a significant number of British homeowners both at the top of the market and on the lower rungs of the property ladder.”

NUMBER OF PROPERTY MILLIONAIRES BY REGION

Rank	Region	No. of property millionaires (Dec 2013)	No. of property millionaires (Dec 2012)	Change over last 12 months
1	London	239,703	182,583	57,120
2	South East England	82,614	61,586	21,027
3	East of England	28,128	20,470	7,659
4	South West England	13,960	12,094	1,866
5	North West England	7,043	5,586	1,457
6	West Midlands	5,418	4,087	1,331
7	Scotland	8,161	7,264	896
8	East Midlands	2,667	2,003	664
9	North East England	2,574	2,082	492
10	Yorkshire & Humber	1,814	1,541	273
11	Wales	1,043	844	199
	TOTAL	393,127	300,142	92,985

 Source: Zoopla.co.uk, December 2013

 

HIGHEST PROPORTION OF PROPERTY MILLIONAIRES

Rank	Area	Avg. property values (Dec 2013)	Proportion of £1m+ properties
1	South Kensington (SW7)	£2,092,053	71%
2	Kensington (W8)	£2,498,512	70%
3	Chelsea (SW3)	£1,982,268	56%
4	Westminster (W1)	£1,432,036	51%
5	West Brompton (SW10)	£1,540,704	46%
6	Belgravia & Pimlico (SW1)	£1,473,567	44%
7	Notting Hill (W11)	£1,597,498	42%
8	Earl’s Court (SW5)	£1,188,062	42%
9	Fulham (SW6)	£1,034,246	38%
10	Hampstead & Belsize Park (NW3)	£1,218,532	37%

Source: Zoopla.co.uk, December 2013

 

HIGHEST PROPORTION OF PROPERTY MILLIONAIRES (OUTSIDE LONDON)

Rank	Area	Avg. property values (Dec 2013)	Proportion of £1m+ properties
1	Virginia Water (GU25)	£1,081,595	32%
2	Beaconsfield (HP9)	£839,702	27%
3	Chalfont St. Giles (HP8)	£783,310	22%
4	Hartfield (TN7)	£697,535	20%
5	Gerrards Cross (SL9)	£719,765	19%
6	Radlett (WD7)	£693,525	19%
7	Guildford (GU5)	£733,978	19%
8	Henley-on-Thames (RG9)	£666,547	16%
9	Ascot (SL5)	£643,276	16%
10	Harpenden (AL5)	£649,553	15%

Source: Zoopla.co.uk, December 2013

 

LSL / ACADATA ENGLAND & WALES HPI

House prices up £11,219 from a year ago, fastest rate in three years

• Prices rise by £1,400 in November, reaching new record
• On an annual basis prices increase in all regions for the second consecutive month
• By the end of 2013 sales set to be 16% higher than 2012

 

House Price	Index	Monthly Change %	Annual Change %
£238,839	243.2	0.6	4.9

David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments: “The housing market is almost unrecognisable from twelve months ago. Not only have average prices climbed to a new record high – with an annual rise of £11,219 and a monthly increase of £1,400 – but we’ve seen an increase in every region for the second month running – a true sign that the nationwide recovery is really taking off. The LSL house price index incorporates all transactions including cash.

“Competition is strong through rising demand and supply of new instructions not growing , a factor that will continue to prop up prices in the long term. Confidence is higher throughout the market, with the Help to Buy scheme and record low interest rates contributing to the positivity. Over the second part of this year, consumer confidence has snowballed as the economic picture improves, leading to a significant rise in sales. The increased availability of mortgages, in part thanks to the government’s schemes, and the greater range of mortgage deals on offer has swung open the door to a new host of first-time buyers, making the distant dream of homeownership now a reality for thousands.

“Strong headway is finally being made towards a universal recovery. All ten regions in England & Wales experienced positive movement in prices on an annual basis for the second time in three years. Annually prices have increased in over 80% of local areas up and down the country – the highest percentage since September 2010. The trajectory is clearly upwards. Record high house prices have not only been recorded in the capital, but also in areas of the South East including Oxfordshire, Hertfordshire and Cardiff.

“However, there is still uneven growth in property values across the country. London prices continue to race ahead in a different gear with 9.2% annual growth in the capital vastly outshining the rest of the UK. Between August and October sales in London were up 27% on the same three months in 2012, reflecting intense demand for properties in London, both from domestic and abroad.

“In his Autumn Statement the Chancellor unveiled plans to unleash a further £1 billion to unblock housing development to address the critical shortage in supply. This will play a role in preventing prices rising too far too fast. But this is only the beginning, and it’s vital that house building is given greater attention in 2014 and beyond, in order to ensure the recovery rolls forward at a sustainable level.” 

Marsh & Parsons

2014 FORECAST: LONDON TO SEE HOUSE PRICES RISE BY 5-7%

• London prices expected to stabilize in 2014 with annual growth of  5-7%
• Prime London will continue to be a magnet for overseas buyers
• Business confidence to boost the corporate lettings sector

House Prices

London property prices will continue to dwarf those in the rest of the UK in 2014, but the rate of growth is expected to stabilize, according to estate agent Marsh & Parsons.

They forecast that Prime London house prices will rise by 5-7% in 2014, compared to 10.3% in the last twelve months[1], with the majority of growth expected to take place in the first half of the year.

Peter Rollings, CEO of Marsh & Parsons, comments: “London’s housing market saw a substantial uplift in 2013, and we expect a similarly strong start in 2014 to drive an annual rise in prices – but these won’t be as spectacular as last year. With ongoing support from Government initiatives, the rate of growth will remain sustainable.

“Following improvements in unemployment levels, we’re likely to see modest increases in interest rates next year. But with a general election coming up in 2015, any changes are unlikely to create shockwaves through the housing market.”

Supply and Demand

A lack of supply being met with high demand will continue to drive price increases in the Prime London property market. At the end of 2013, there were 18 registered buyers per available property, compared to 13.5 at the end of 2012[2], and this will ratio will remain high in 2014.

Peter Rollings continues: “Many sellers will remain cautious of putting their property on the market as they are not confident that they will be able to find somewhere to move to, therefore supply is unlikely to improve considerably next year.  As a result, property will continue to sell for close to or at the asking price and we may see our average success rate of 98% of the sale price currently being achieved in Prime London increase even further.[3]”

 

Overseas Buyers

Changes in policy announced in George Osborne’s Autumn Statement mean that foreign property owners who sell second homes in the UK will have to pay Capital Gains Tax from April 2015.  But with overseas buyers and foreign nationalities making up just 28% of all Prime London purchases in Q3 2013[4], this change in policy is unlikely to have any dramatic effect on prices in 2014.

Peter Rollings continues: “With the change only being introduced in April 2015, we may find a short-term rush for tax-free sales before the policy comes into effect, helping to boost supply and fluidity at the highest level. However, even with yet more tinkering from the Chancellor, London remains a more attractive and easier place to buy property than many other cities around the world, and providing that the politicians don’t ‘kill the golden goose’, demand for the best properties will remain fierce.”

 

The Rental Market

Based on current trends, Marsh & Parsons expects rents in Prime London to hold steady in 2014, with rises of 2-4% in 2014, as opposed to the generally static rent levels recorded in 2013.

Peter Rollings continues: “The improved economic mood has eased anxiety among city firms and as a result, the corporate lettings sector will flourish next year. Based on current trends, we expect the greatest rental increases to be found in two-bedroom properties in central areas such as Kensington & Chelsea, which are popular locations for visitors from abroad. As competition heats up, void periods will continue to fall, and 2014 tenants will face intense competition for the best properties.”

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[1] Annual price in Q3 2013 in Prime London, according to Marsh & Parsons’ latest London Property Monitor

[2] Data from Marsh & Parsons’ London Property Monitor

[3] Marsh & Parsons’ sales data

[4] Marsh & Parsons London Property Monitor, Q3 2013

Today’s Paper Summary: 15th November 2013

Property

As the Government’s Help to Buy scheme takes off and the economy grows stronger, house prices will increase across the UK by 7% next year and 5% in 2015. The improving economy is expected to transform the country’s property market. Average prices in London will jump by £76 each day in 2014 but every region will enjoy a rate of growth last seen before the financial crisis, according to a new report by Knight Frank. 

Many first-time buyers feel that buying in London is a struggle and that half the battle is finding out what help is available. Recently it was found that third of wannabe homeowners have lost all hope of buying according to L&Q’s housing association. A study of 2,000 under 35’s revealed that despite government help, up to 70% of those who have been saving had given up and blow the cash on holidays, cars or even to pay bills as the state of the market and the recession eliminated their property plans. In London for instance, prices have risen and it is difficult for a vast majority to find affordable accommodation, which has meant shared accommodation has become an option for many people. Shared ownership is said to be a flexible and affordable route – it was originally launched to help low-paid workers buy affordable homes but the part-buy part-rent scheme is now mainstream. 

 Canary Wharf is getting ready to welcome a 74-floor skyscraper. The tower will be Europe’s tallest purely residential building. Ryan Corporation U.K. Ltd. paid 100 million pounds ($160 million) for the site of the proposed skyscraper, the closely held company said yesterday in an e-mailed statement. The 242-meter (794-foot) high tower would be the tallest in London’s second-largest financial district and the apartments would have a total value of more than 1 billion pounds when it opens in 2018.

Personal Finance

Families could be about to celebrate a drop in the cost of their weekly food shop as Asda fired the opening shots in a new supermarket price war. The company will knock £1 billion off prices over the next five years it said yesterday and accused rivals of ‘gimmicks’ in offering customers vouchers while boosting prices.

Rising energy bills are said to be killing off British poinsettia plants. It is thought the Christmas staple red pot plant will be in short supply this year with growers hit by rising energy costs. For millions of families the plant is as important at Christmas time as the turkey or Christmas tree.  But sadly there may be disappointment as the plant is getting increasingly more expensive to heat, as they need carefully controlled temperatures of between 59F to 68F – and unfortunately soaring fuel bills have driven some growers out of business. 

Economy

News of a slowdown in the Eurozone has created a somewhat a bleak outlook, and has reduced people’s hopes of a rebound as suggested earlier in the year as Europe’s two largest economies stumbled in the second quarter – Germany and France. By contrast, the British economy grew 0.8% in the third quarter this year, it’s most significant level of growth since 2010. The UK economy could reach what the Bank of England officials have referred to as ‘escape velocity’ sooner than until recently expected. The banks Monetary Policy Committee also warned that a global slowdown posed the greatest threat to the recovery. And reports today that disappointing growth figures in the Eurozone and Japan driven by weak export numbers have dashed hopes that a global economic recovery would gather pace in the year’s second half.

 

 

 

LSL / Acadata House Price Index: Friday 8th November

Transactions and prices continue to climb across the country

• Prices rise in all regions in England & Wales for first time in three years
• Most transactions recorded in an October since 2007
• House prices up 4.3% from a year ago, setting new record high

House Price	Index	Monthly Change %	Annual Change %
£237,161	241.5	0.6	4.3

David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments:

“We’re only at a fraction of the heights seen before the credit crunch struck, but still the housing market is a hive of activity. There’s been a tremendous jump in transactions over the past three months – with the most sales recorded in an October since the onset of the crisis. Key to such a surge in activity is the renewed level of confidence seeping back into the market and a plethora of attractive mortgage deals enticing more and more aspiring buyers back into the housing arena. 

“For the first time in nearly three years, all ten regions in England and Wales have seen an increase in prices – an astonishing recovery, one that we can now say is truly national.  Even earlier this year, many regions were still struggling to escape from the resilient grasp of the financial crisis. But in little over six months we’ve seen a drastic improvement in the availability of mortgages and increased lending by the banks to those at the lower end of the spectrum. The increase in demand, in part fuelled by the second phase of Help to Buy having being brought forward, has driven up average house prices across the country by £1,376 over the past month and £9,776 from a year ago. But despite significant rises, the increased availability and competitiveness of mortgages has also opened the door to a new wave aspiring buyers who had previously been persistently locked out. The stark rise in first-time buyer activity in particular has given the speed of recovery an even greater uplift.

“Up and down the country regions are benefiting from the resurgence and experiencing new levels of activity. Up by 26% East Anglia has seen the greatest boost in sales, but even the region with the lowest rise in transactions, the West Midlands, falls only shortly behind rising by 22%. In the face of rises sweeping across the nation, we must ensure that the market doesn’t soar out of reach for those at the bottom of the ladder.

“Over the next year it’s crucial that the Government supports the growth of new house building to meet the growing demand, and prevent properties across the country becoming unaffordable for large portions of the population. But lenders too must share some of the load, as they play a pivotal role in reaching the lower end of the housing market and this can help support a continued and more sustainable rate of recovery into 2014 and beyond.”

Value of one-bedroom properties in Prime London rises by over £60,000 in a year

 

• One-bedroom properties in Prime London have appreciated by 6% in the last quarter, and by 14% in the last year
• One-bedroom properties are very popular with first-time buyers and buy-to-let investors, spurred on by low interest rates and Help to Buy
• Prime London property overall has risen by 1.6% in the past quarter, 10.3% in the past year

 The average value of one-bedroom properties in Prime London has risen by over £60,000 in the past year, following a 14% annual growth, according to estate agent Marsh & Parsons’ latest London Property Monitor.

The bulk of this increase was gained in the last three months, after a strong 6% quarterly rise increased the average value of one-bedroom properties by an extra £29,140. This follows three strong quarters of growth in the past year, contributing to a 14% annual growth – equivalent to £62,063 in a year.

The average price of a one-bedroom property in Prime London now stands at £502,139. In Prime Central London, covering the most expensive areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico, the average value of a one-bedroom property has risen to £583,036 – a 9% increase in the last year, equivalent to £48,703 in a year.

Peter Rollings, CEO of Marsh & Parsons, comments: “With returns like these, it’s no surprise that people are queuing up to buy Prime London property. Competition for one-bedroom properties in particular is fierce. Spurred on by the rapidly improved availability of mortgages and low interest rates, first-time buyers are flooding the market in competition for the best properties in this price bracket.

“In addition, one-bedroom properties generate the best rental yields, making them a popular purchase for buy-to-let investors. We have noticed many young, would-be buyers adopting more European attitudes to renting, with many choosing to become long-term renters, rather than saving up for a deposit. As a result, the value of one-bedroom properties in Prime London is shooting up the scale.”

One-bedroom properties have risen in value at a faster rate than properties of other sizes in Prime London. The overall rate of growth in Prime London, reflecting all sizes of property combined, was 1.6% in the past quarter and 10.3% in the past year.

By comparison, two-bedroom properties have appreciated by 10% in the last year in Prime London, and by 7% in Prime Central London. Three-bedroom properties have appreciated by 12% in the last year on average across both Prime and Prime Central London.

Property Type Breakdown

	Prime Central London	Non-Central Prime London	All Prime London
1 Bed	£     583,036	£        429,756	£        502,139
2 Bed	£  1,302,125	£        615,495	£        895,770
3 Bed	£  2,298,161	£        923,559	£     1,523,116
4 Bed	£  2,925,556	£     1,364,599	£     1,976,985

Strong price growth continues

In Prime London as a whole, property values have continued to rise, with prices climbing by 10.3% in the past year and by 1.6% in the last quarter.

However, for the first time in five quarters, the more expensive areas of Prime Central London have outpaced Prime London as a whole by experiencing a higher quarterly rate of growth. The rate of growth in Prime London was 1.6% in Q3, while in Prime Central London this figure was 1.7%.

Prime London Property Price Movements

	Average value	Quarterly Change	Annual Change
Prime London	£ 1,426,243	1.6%	10.3%
Prime Central London	£ 2,040,387	1.7%	8.2%

Supply and Demand

The number of registered buyers has increased by 6% in the last quarter, but for the first time this year, there has also been an increase in the supply of property to the market. While the volume of supply remains at a historic low – there are still 17% fewer properties on the market than at the same time last year – the ratio of supply to demand is beginning to stabilise.

Peter Rollings continued: “The ratio of supply and demand is the key factor which determines prices on the London property market. While interest rates remain low, Prime London property will continue to be seen as an attractive investment opportunity for both UK and overseas buyers, and prices will remain high.

“However, rather than create a bubble, we may find that Help to Buy actually stabilises prices by encouraging first-time sellers to put their properties on the market and take their next step up the property ladder. For the past three quarters, a lack of available property has created a high premium for those on the market, but the gradual increase in supply, which we are beginning to see now, combined with the wide volume of property development taking place, may start to initiate more ‘normal’ market conditions.”