Where the savvy property investor is putting their money
Off-plan property investment has produced stunning returns for investors in London property. However, nervousness about Brexit and question marks over affordability have tarnished prime central London property values over the last 12 months. Elsewhere, property values have exploded in pro-Brexit Britain.
Knight Frank estimates that prices in central London fell by around 7% last year. RICS Chief Economist Simon Rubinsohn now expects that central London prices will stabilise this year and next. However, he doesn’t think that central London prices will shoot up. What we’re witnessing is that savvy investors are looking further afield, to outer London and the commuter towns.
In this article, we’ll examine three factors that are driving these new property hotspots (and will continue to do so). We’ll also take a snapshot look at three locations where off-plan property investment could produce market-beating returns on investment.
People are moving out of London
People are relocating from the capital faster than they have done for more than ten years, according to research from Hamptons, the estate agent. In 2016, more than 77,000 Londoners moved out of the capital and bought homes in outer London or beyond.
Some of those migrating are taking profits from London’s soaring house prices over the last few years. Others are moving because they just can’t afford to buy in London. In addition to more affordable property prices, the cost of living is lower, too.
Eight out of every ten people moving out of London are moving to towns that are within a commutable distance – pocketing the higher wages paid in London, and saving on their daily costs. The trade-off is the commute: a price worth paying for more space, lower mortgage or rent payments, and other benefits.
Commuter towns are benefiting from regeneration efforts
Regeneration efforts are benefiting commuter towns and parts of outer London. Many of these are centred on huge infrastructure projects like Crossrail (and Crossrail 2). Not only do residents benefit from the advantage of the quality of life and a lower cost of living, but also travel to the capital for work and leisure is faster and more convenient.
While towns that are directly impacted by Crossrail are undergoing massive regeneration, predominantly near stations and town centres, other towns are also regenerating. No local authority wants to be left behind, and billions are being committed to upgrading streets, shopping facilities, entertainment areas, and residential. Business and visitors are being encouraged to these towns, and local economies are looking up.
People want the lifestyle benefits of renting
The housing dynamics of the UK are changing. Renters are slowly replacing home ownership. Currently, there are around 5.5 million households renting their home. PwC has forecast that this number will rise to 7.2 million in 2025. Meanwhile, home ownership is at a low not seen since the early 1980s.
Where should you invest?
Property investment opportunities are rippling out from the centre of London. Regeneration projects have the desired effect: outer London zones are becoming desirable areas in which to live. Off-plan property investment is reaping the rewards in locations such as Colindale, a location to which I took my whole team a little while back. It’s only 30 minutes to Charing Cross and Bank, and 10 minutes to the M1.
Colindale is a great example of a council committing to change and following it through. Major developers are transforming the whole area with huge investment, new retail, commercial and residential.
A little further afield, there is a host of commuter towns that we’ve identified as the future commuter town hotspots. We’ve put together a book which outlines these. We’ll be publishing soon – to be one of the first to receive this invaluable guide, contact one of our team today.
Meanwhile, here’s a couple of the towns where we think investment returns could fly.
Crossrail is due to start running here from 2019. Investment is flourishing, and swathes of the town are being regenerated. Heathrow is only a few miles away. It’s been identified as a rental hotspot by CBRE. The commute to London Paddington is less than 20 minutes. Bond Street will be a 32-minute journey when Crossrail is running. The new Western Rail Access to Heathrow will bring the airport just seven minutes from Slough town centre.
The average property price here is £356,726 (January 2017). That’s up by 16% from a year earlier. The average house rental is £1,436 per month – a rental yield of 4.8%. (Data from home.co.uk.)
Commuters are rushing to buy and rent here. It’s affordable, well-connected, and offers a quality of life that central London can’t match.
To discover more, download our free Slough Property Investment Guide.
Leatherhead is benefiting from a ten-year regeneration plan, with an investment of £200 million pencilled in from 2016. The Swan Shopping Centre, Leatherhead’s main retail venue, is to be revamped, and there will be a vibrant urban quarter and new riverside park. A transport package will deliver easier, faster, and safer green travel options between Fetcham, the town centre, railway station, business parks, and the proposed Riverside Quarter.
With a commute time of just 44 minutes to London Victoria, and Heathrow and Gatwick both less than 30 minutes by road, Leatherhead is fast becoming a favourite of commuters.
In January 2017, the average property price here was £655,595, an increase of 5% from a year earlier. The average house rental is £2,624, producing a rental yield of 4.8%. (Data from home.co.uk.)
To discover more, download our free Leatherhead Property Investment Guide.
As I’m writing this, there’s still a big gap in affordability between central London, outer London, and commuter towns. This affordability, plus regeneration and the quality of life available in commuter towns, is fuelling the population shift from London. As demand grows, property values and rental prices should follow. Now could be the perfect time to invest in commuter towns.
If you want to find out more and be one of the first to have access to our commuter towns research, contact one of our team today +44 (0)207 923 6100. We’ll help you find the best off-plan property investment opportunities for long-term gains and rental income cash flow.
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