London house prices: commuter hotspots catch up with the capital
07-02-2015
House price rises in the commuter belt have caught up with increases in London, as buyers priced out of the capital create new property hotspots within an hour’s commute of the city...
The latest data from the Land Registry show an annual growth of just more than nine per cent, making the average London house price £475,961.
In the South-East, annual price rises are also just over nine per cent, but average house prices are £246,552.
“London has seen prolonged price growth for a 10-year period,” says Lucian Cook, director of residential research at Savills. “This means people are finding it hard to buy in their preferred location in London, so they are looking in the commuter belt.”
Cook expects to see the commuter zone start to outperform London in the coming months, thanks in part to tougher new mortgage lending rules that have capped buyers’ ability to borrow huge sums to spend on a London home.
If interest rates rise, this will also deter people from buying expensive property in London when they could buy a similar property for significantly less money outside of the city.
“Price growth in London has pushed out into the outer boroughs. This is a classic sign that we are at the end of the cycle,” says Cook. “The result is that you are not going to see London perform as strongly as the rest of the country over the next five years.”
Cook advises going for the affluent commuter towns, such as Guildford and St Albans. “I would probably go for some of the higher-value markets because that tends to be where the London money gravitates to first. There might be money to be made in Luton and Slough, but it is going to be the turn of the über-towns to outperform.”
The Land Registry’s top-performing locations are to the west of London. In Reading, prices have risen 13.3 per cent to an average of £239,099. It’s an area that is set to benefit from the new Crossrail line from 2018. Craig Pearson, managing director of Parkers Properties, believes the current boom is a result of investors swooping on apartments in the city centre. “It has gone mad,” he adds.
Other strong performers are Windsor and Maidenhead, where prices have grown an impressive 12.9 per cent in the past year to an average of £413,270. Buyers are also flocking to Windsor’s stunning outlying villages.
Wokingham, in Berkshire, was recently named the most family-friendly place to live in Britain, and it has seen prices rise by 12.6 per cent in the past year to an average of £338,363.
Other outperformers include Bracknell Forest, Brighton and Hove, central Bedfordshire, Hertfordshire, Milton Keynes and Southend-on-Sea.
In the South-East, annual price rises are also just over nine per cent, but average house prices are £246,552.
“London has seen prolonged price growth for a 10-year period,” says Lucian Cook, director of residential research at Savills. “This means people are finding it hard to buy in their preferred location in London, so they are looking in the commuter belt.”
Cook expects to see the commuter zone start to outperform London in the coming months, thanks in part to tougher new mortgage lending rules that have capped buyers’ ability to borrow huge sums to spend on a London home.
If interest rates rise, this will also deter people from buying expensive property in London when they could buy a similar property for significantly less money outside of the city.
“Price growth in London has pushed out into the outer boroughs. This is a classic sign that we are at the end of the cycle,” says Cook. “The result is that you are not going to see London perform as strongly as the rest of the country over the next five years.”
Cook advises going for the affluent commuter towns, such as Guildford and St Albans. “I would probably go for some of the higher-value markets because that tends to be where the London money gravitates to first. There might be money to be made in Luton and Slough, but it is going to be the turn of the über-towns to outperform.”
The Land Registry’s top-performing locations are to the west of London. In Reading, prices have risen 13.3 per cent to an average of £239,099. It’s an area that is set to benefit from the new Crossrail line from 2018. Craig Pearson, managing director of Parkers Properties, believes the current boom is a result of investors swooping on apartments in the city centre. “It has gone mad,” he adds.
Other strong performers are Windsor and Maidenhead, where prices have grown an impressive 12.9 per cent in the past year to an average of £413,270. Buyers are also flocking to Windsor’s stunning outlying villages.
Wokingham, in Berkshire, was recently named the most family-friendly place to live in Britain, and it has seen prices rise by 12.6 per cent in the past year to an average of £338,363.
Other outperformers include Bracknell Forest, Brighton and Hove, central Bedfordshire, Hertfordshire, Milton Keynes and Southend-on-Sea.
There are still a handful of areas of strong growth within London, but these are dominated by the affordable outlying boroughs, including Croydon (up 15.9 per cent to an average of £334,729) and Enfield (up 15.1 per cent to an average of £340,654).
In central London, overlooked Lewisham is finally having its moment, with prices up 15.3 per cent to an average £399,425, as first-time buyers start to explore areas such as Lee, Hither Green and Catford.
Meanwhile Newham, thanks to the post-Olympic development of thousands of new flats, has seen prices rise 17.5 per cent in the past year to an average of £301,368.