INTERNATIONAL - House prices in many London boroughs have fallen year-on-year from September 2016 – September 2017. Is it as bad as it is being reported? Is the issue confined to London only?
House prices in the Royal Borough of Kensington and Chelsea tumbled by over 10% year-on-year, and the fall in prices has almost entirely only affected high-end property and houses within inners boroughs, with other properties showing resilience. House prices in neighbouring Hammersmith and Fulham have also fallen by 8% year-on-year, to an average price of R 16.7 million from R 18.1 million according to Rightmove.
There are many reasons why people are reticent to continue investing in high-end property. The increase in second home stamp (transfer) duty charges means that the overall cost is higher, and expensive property has been worst affected. Low oil prices have deterred Russian buyers and China is trying to limit the amount of money flowing out of the country; the limited pool of the extremely wealthy is getting smaller. Also, whilst Brexit negotiations are underway, people are reluctant to invest such a large sum in such uncertain times.
Conversely, house prices in more affordable or outer boroughs have climbed, and boroughs in the east are showing resilience to the market slow-down. A promising combination of affordability and the “Crossrail effect” has seen prices in places such as Woolwich increase by 5%, yet remain modest at below R 8.2 million. Further capital uplift is expected in the area, with some predictions that prices could increase by another 20% as the area is also experiencing a significant amount of regeneration.
King Henry’s Dock is a fantastic Woolwich buy to let investment opportunity. Apartments start from R 6.4 million and investors get a 150-year leasehold. Every apartment boasts a fantastic view over the Thames – a very enticing feature for would-be renters. As Woolwich is set to be the best-connected area outside of zone one, it will be a practical place to live for those who need to commute to central London or Canary Wharf – thus exposing the property to a wider rental market and increasing the yield that can be achieved.
For investors who want to avoid London altogether, cities with more affordable house prices will be less impacted by second home stamp duty charges. Large cities like Manchester and Birmingham offer cheaper housing, and with the improvements made to the UK’s rail infrastructure also set to have a positive impact on future price growth as reaching London and other major cities is now easier than ever. The overall average price for a property in Manchester is R 3.3 million and in Birmingham it is R 3.2 million, compared to an overall average in London of R 10.9 million according to Rightmove’s House Price Index. Not only will investors pay less for the property, but what we can also discern from these prices is that stamp duty and additional charges will be lower.
Companies are beginning to look outwards from London, and places like Manchester are stepping into the limelight as more affordable alternative business locations. With the relocation of business to places such as Manchester comes an influx of young professionals chasing career opportunities. Companies such as the Co-Operative Group, Ticketmaster and the Royal Bank of Scotland are just three examples of businesses that have made Manchester their home. Luxurious hotel-style apartment blocks are gaining popularity in Manchester due to the increasing number of young professionals wishing to reside in the city centre. Manchester property investment apartments in riverside developments such as Downtown can be purchased from R 2.6 million and yields of up to 7% can be achieved.
Other investment sectors that remain robust and are largely unaffected by Brexit include the retirement home sector and student property investments. This is mostly because demand is not swayed by political sentiment in the UK, but by unstoppable unrelated factors. The population is ageing and with a larger elderly population there will be a higher demand for luxury retirement property, something of which the government does little to cater for itself. The UK is home to 10 of the world’s top 100 universities, and boasts the University of Oxford and University of Cambridge, both of which are renowned across the globe. It is no doubt that studying in the UK has international appeal, and with the fall in the value of the pound, it has just become a whole lot cheaper for international students.
These are known as commercial investments, and as such do not incur stamp duty charges if the total sum is under R 2.7 million. Suites in a retirement retreat such as Ocean View on the Isle of Wight start from R 1.6 million, and is leased back to the developer for a 10% return per annum. Oakwood House student accommodation investment in Sheffield can be purchased from R1.02 million, and the developer has assured a rental return of 8% for three years.
One Touch Property provide UK property investment advice and sourcing a wide range of property investment opportunities including; buy-to-let and high yield commercial property. One Touch investment consultants are available to meet in South Africa this week (21st to 29Th Sept 2017), please book your property investment consultation today.
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