With over 9 million residents living in London, this city is rightfully considered one of the leading metropolitan destinations for living, working and investing in. The main driving forces behind the strong demand for property in the capital are limited stock and the easing of COVID-19 restrictions, as more people come back to city life. As a result, real estate in 2022 in the UK is selling faster than it has done in previous years.
The delivery of new housing in London has slowed down for the first time in almost 10 years thanks to the lockdowns and supply chain issues, which have postponed the completion of developments. This led to a whopping 9.2% price increase in the year to July, according to the Land Registry, as the average house price reached GBP 544,000. According to MoneyWeek, a British weekly investment magazine, with higher capital values and buyers more dependent on larger mortgages, London house prices are expected to drop by 8% in 2023 and 4% in 2024.
Real estate in London and across the UK in general can be freehold or leasehold. In the first case, the land and structure solely belong to you, which means you are liable for all costs regarding administration and maintenance of the property. A leasehold is a long-term rental arrangement, the length of which may vary between 40 years and 999 years. The lease can be renewed upon the expiry of the first term in line with the current market rate, otherwise the property has to be returned to the initial owner. In London, most properties for sale are in the leasehold category.
The most essential factors regarding economic appeal in London are:
London offers various types of properties to buyers in accordance with features, size and design. Below we have reviewed some of them:
The most popular areas of London for property acquisition:
Barking and Dagenham is considered the best connected borough in East London, as it boasts excellent links to Central London, in addition to the availability of the Crossrail stations and the London Overground which stops at Barking Riverside. The areas feature 685 shops, 110 restaurants & cafes, 6 ‘Outstanding’ schools and 25 parks. The average house price here is GPB 336,000, with an average yield of 6%.
Westminster is dominated by some of London’s most stunning attractions and architecture. In fact, this area has over 11,000 listed buildings of special historical or architectural interest. Thanks to its prime location with the City to the east and Kensington and Chelsea to the west, it is one of the most expensive to reside in London. Westminster houses Big Ben, the Houses of Parliament and the London Eye and is both a natural tourist hub and the center of UK politics. The average house price here is GBP 1,004,000, with an average yield of 4%.
Hillingdon is the capital’s second largest and most western borough. One of the area’s most perks is that it house’s Heathrow Airport, providing occupants with seamless connections to European weekend pit-stops. Hillingdon also boasts excellent access to several new major waterways connecting it to the rest of the UK. The average house price here is GBP 448,000, with an average ROI of 4%.
London houses 100+ theaters, around 200 museums, 15,000 restaurants and dozens of iconic attractions, such as The Tower of London, Warner Bros. Studio Tour London and many more, and more than 40% of the British capital is taken up by parks. That being said, according to the latest edition of Tripadvisor Travellers’ Choice Awards, London has been crowned Europe’s most popular destination for 2022.
London is also one of the world’s 4 main fashion capitals, with London Fashion Week taking place twice a year in February and in September. Shopaholics will be keen to learn that there is the largest department store in Europe; Harrods, which is located in Knightsbridge. Another element the dynamic metropolitan city is known for is football, as it houses the most football clubs of any city in Europe, with 10 teams in the top 2 English leagues.
Not forgetting that there are over 3,500 pubs and bars around the city, where you can relax and socialize with your friends. In addition, when living in London, you have the opportunity to indulge in 87 Michelin star restaurants, including Alain Ducasse at The Dorchester, The Araki and Restaurant Gordon Ramsay.
Last but not least, London is home to some of the world’s most prestigious universities and, as a result, has one of the highest student populations of any city. Imperial College and UCL are ranked in the top 10 worldwide, and in total there are 33 universities across the UK capital.
Based on the figures collected from over 4,500 data sources, there were 350,980 properties for sale in London, as of Q1 2022. It is worth noting that 4 out of 5 units available on the market right now are apartments, and there is a lack of detached houses. Such a tendency is due to the ongoing demand for larger properties with a garden and an extra bedroom that can serve as a home office.
According to the LonRes data company, the prime London sales activity remained above pre-pandemic levels in spite of an annual drop. To be more specific, sales fell 29% annually but were still 19% higher than during the first halves of the 3 years leading up to the pandemic. Such a strong position in the upscale real estate market is attributed to the resumption of international travel and relatively budget-friendly prime prices (capital values are still down by 15% from the market peak 7 years ago).
As more and more people are returning back to London for work, there is an undersupply of not only properties for sale, but also buy-to-let units in the capital. In fact, the housing construction does not have the capacity to meet the 90,000-100,000 new homes required annually to keep up with the demand, which led to an astonishing price surge, mentioned earlier. As revealed by the HomeLet insurance company, the average rental price for new tenancies amounted to GBP 1,832 a month in July 2022.
You can consider West London to purchase a buy-to-let property. For example, in the Harlington town based in Hillingdon, the average price for a 1-bedroom flat is GBP 221,021. At the same, the rental yields here are 4.7%. South London is also a highly attractive option for investment as you can take a look at Croydon with an average property price of GBP 397,000 and a yield of 5%.
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