London property update
It Pays to check your Borough before you Buy, reports Offshoreonline.org
Research produced by international mortgage specialists Offshoreonline.org on the London residential housing market has highlighted the importance of careful choice for overseas buyers thinking of investing in the still buoyant London housing market. Over the last 12 months, according to data from the UK Land Registry, buyers who did their homework carefully could be nearly 12% better off simply by paying more attention to where they bought.
The Islington effect which seems to have been a feature of the market since Tony Blair left the Borough in 1997 continues to have a significant impact on average London house prices, with values there rising by 8.5% in the past 12 months and 1.4% in May alone. At the other end of the scale, if you had bought in Bexley in South East London, over the last year you would have seen the value of your investment slip by 3.4%, The largest monthly fall however was in Redbridge, which is just a short distance from the Olympic Park, a hot spot for buy to lets, if the estate agents are to be believed.
Erica Evans of expat property search consultancy Expatfindaproperty.com comments, “All too often average data hides a far more complex picture and for overseas buyers in particular who may not have a detailed borough by borough knowledge of the Capital, buying can be fraught with difficulties. We regularly receive enquiries from buyers looking to establish a foothold in London, but many will end up changing their mind as to where they wish to invest once we have shown them the true local picture.”
For the mortgage lender too, choice of borough is an important factor. Stung by their experiences of the credit crunch, many banks now have internal controls limiting the number of properties they will lend on in a housing block, a street and even a borough. Tim Harvey, managing director of Offshoreonline.org comments, “When we receive client enquiries for homes in the popular areas of Hackney and the surrounding boroughs, a first step for us is to check how much exposure the bank has in area, as even the best clients can have their application turned down, if the bank’s underwriters decide the exposure to a particular area is too high. Barking is a classic case in point, buyers love it, but the banks are far more cautious and will pick and choose individual buildings.”
Where property investors are prepared to be flexible, Evans advises that the traditional quality areas are always worth a close inspection. Wandsworth, where prices rose by 3.5% in the last year and by 0.6% in the last month, Kensington and Hammersmith which recorded similar or in some cases slightly better performance all have a range of property types to suit most budgets and importantly have established retail, community and transport infrastructures.
Whilst average house prices in the UK fell by 2.2% in May, this figure hides a far more complex position at the local level, so careful research as ever should always pay off.