“London Buy To Let property has and always will be more expensive than the rest of the UK” – really?
lack of new homes, poor affordability and Brexit could hit the market harder than the rest of the UK
Fans of The Clash will be familiar with their hit song of 1979, ‘London calling’, which has become an audible iconic song to enhance many “London” aspects over the years. However, ‘London cooling’ would describe the capital’s housing market currently.
Brexit uncertainty, tax hikes, expressly the increases in Stamp Duty and what some believe is a natural correction are all offered as reasons for stalling prices. Many believe the capital – home to over eight million people – may have to get used to this new normal until political and economic certainty is restored, because its high prices make it more susceptible than most areas to affordability pressures, which lessens demand.
Nationwide chief economist Robert Gardner says: “In London and the South-east, affordability has become even more challenging, with more people priced out of the market.” Although criteria for qualification for traditional mortgages, expressly affordability has become more pronounced, this “stiffening” in criteria is also filtering through to underwriting of Buy To let mortgages too. Coupled with returns and margins being reduced this could be another influencing factor in London’s property price stagnation.
Prices fall in the Capital
The Nationwide house price index revealed a 0.5 per cent fall in the capital’s property prices in 2017, this maybe a direct reflect of the apatite of overseas buyers cooling as a direct result of global uncertainty coupled
Yet before wannabe first-time buyers jump for joy at the thought of tumbling prices, we are talking about a gentle cooling, not an Arctic blast. London, after all, is still by far the most expensive region in the country. The average London house price is still a whopping 14 times the average salary in the city.
Opportunity for the Suburbs?
One very positive to consider though; with prices, affordability and lack of stock proving such a problem in London, focus of “would be” London buyers is bound create opportunity in the surrounding “commutable” areas where returns are more attractive and costs of property ownership, especially freeholds are much more attractive. Could now be the time to buy in the suburbs?