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Which Two London Boroughs will See Highest Growth Over Next Five Years?
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Despite recent warnings of a housing bubble, a new forecast by a leading estate agent states that house prices are set to increase even further across London over the next five years.
According to Savills, two London boroughs – Waltham Forest and Lewisham – are expected to experience the highest growth by 2020, up to 20%.
East London’s Waltham Forest has witnessed some of the greatest price rises in the capital, due to an increase in demand from buyers priced out of more central spots.
Which Two London Boroughs will See Highest Growth Over Next Five Years?
House prices in Lewisham, south of the river, are set to rise at a similar rate, caused by strong interest in popular parts such as Blackheath, Brockley and New Cross. Further investment from the council and plans for new build property developments are contributing to growth predictions.
If you have an investment property in either of these boroughs, or are considering buying there, your investment could see a surge in value over the next five years.
However, Head of Residential Research at Savills, Lucian Cook, claims that these predictions are largely dependent on the rate of interest rate rises in the next five years.
He says: “If rates rise too quickly, mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise.
“That risk has been mitigated by recent mortgage regulation, which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past ten years.”1
In the outer suburbs of London, house prices are set to increase by an average of 17% by 2020.
This includes the cheapest borough, Barking and Dagenham, where the average home is valued at £318,000. It also encompasses Greenwich and Newham, which have both experienced some of the highest rises over the last year.
Even house prices in the most expensive boroughs, Kensington and Chelsea and Westminster, are forecast to grow by 15%, despite recently recording price declines.
Savills expects this slowdown to be short-lived, as buyers get used to higher Stamp Duty and international buyers are likely to return to the market soon.
Growth is expected to be slowest in Islington and Richmond, where the average property price is already over £500,000. However, price rises of 10% are still predicted.
In Hackney, now one of the capital’s most expensive boroughs, prices have spiralled recently. However, Savills still expects growth of 15% in Hackney and Southwark, where prices are catching up with prime central London and the City of London, which border both boroughs.
If you’re a landlord in London, make sure you keep up to date with the property market, to determine the growth in value of your asset.
