March 9, 2017
Toby Whittome, Jackson-Stops & Staff’s Sales Director in Central London, discusses the latest trend in the London property market:
It is universally acknowledged that the best way to make a big decision is by considering long-term benefits instead of short-term ones. This advice again proves true when considering our latest analysis of London’s residential property market – reverse property price ripple effects are in full swing in London.
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I want to begin by clarifying that a ‘double reverse ripple’ is not in fact a new flavour of ice cream – it is instead the term coined for the trend in London whereby price trends have been flipped not only in terms of the high value vs. low value borough contrast, but also in terms of geography. It supports the idea that investing in high-value London boroughs is still a smart move, no matter how tempting the recent significant price growth seen in the lower value boroughs may be.
Take Kensington and Chelsea for example: the annual price increase in November 2016 was less than 1% (about £8,700), but the 10-year price increase is nearly 107% (about £673,372). In a reversal of this situation, the low-value, outer London borough of Barking and Dagenham has seen a 17% price increase in the last year, but its 10-year price increase is significantly weaker at about 68%. While the double-figured annual growth seems tempting, on a long term view growth is well behind the higher-value boroughs.
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Buyers and sellers need to take an important message from this: a long-term view of the property market is essential to the decision-making process. For example, between January 2008 and January 2009 (during the height of the financial crisis) Kensington and Chelsea saw average prices briefly fall by up to 17.5%, or more than £140,000, before rapidly bouncing back. However the long term trends speak for themselves, with high value London boroughs massively outperforming the rest of the UK. Annual fluctuations in prices caused by macro-economic and political issues, as we are seeing right now, should not obscure the big picture.
It is important to note as well that certain central areas are outperforming in both the short and the long term. Southwark and Lambeth especially stand out – their stellar performance is a result of an ideal central location alongside recent and rapid programmes of regeneration.
If you have the budget and desire to live in the high value London boroughs you will undoubtedly gain significant lifestyle benefits including access to the Capital’s business centres, cultural and shopping hotspots and excellent transport links. Given that prices here have been weaker recently, but have stayed strong in the long term, now is the perfect time to invest in these iconic areas of London, particularly for those buyers from abroad who can take advantage of the weaker pound sterling.